JUDGMENT : K.M.THAKER, J. 1. Heard Mr. Pandya, learned advocate for the petitioner and Mr. Mishra, learned advocate for the respondent. 2. In present petition the petitioner has challenged judgment and order dated 12-6-2007 passed by Industrial Court in Appeal (I.C.) No. 9 of 2006 whereby Industrial Court set aside the judgment and order dated 29-4-2006 passed by learned Labour Court and directed the bank to pay overtime to the employees in accordance with settlement dated 27-10-2002 in Reference (I.C.) No. 3 of 1998. The Industrial Court also directed the Bank to withdraw the change effected on and from 10-9-2004. Feeling aggrieved by the said order the Bank has taken out present petition. 3. So far as factual background is concerned it has emerged from the record and from the submissions by learned advocates that the petitioner is registered cooperative bank and the respondent no.1 is union which also enjoys status of representative union under Bombay Industrial Relations Act, 1947 (hereinafter referred to as the “Act”). The petitioner bank is governed by the provisions under said Act. It appears that somewhere in 1997/1998 the respondent union had raised demand/dispute with regard to salary and other benefits for the employees of the bank. The said demand/dispute was referred for adjudication and registered as Reference (I.C.) No. 3 of 1998. 3.1. During the proceedings of said reference case the bank and the union had entered into negotiations and deliberation for settlement as a result of which an overall settlement in respect of the demand raised by the union was arrived at. 3.2. The terms and conditions of the settlement were agreed by and between the parties and thereafter the parties jointly requested learned Court to pass award in terms of the settlement. 3.3. Consequently award dated 27-10-2002 came to be passed in terms of the settlement. 3.4. It has also emerged that one of the terms and conditions agreed by and between the parties in the said settlement was with regard to overtime. 3.5. Sometime after award in terms of settlement was passed, the bank issued notice of change dated 19-7-2004 and declared its decision to effect said change i.e. to discontinue the practice of payment of overtime. 3.6. The said notice came to be issued in accordance with Section 116 of the Act read with section 42 of the Act. 3.7. 3.5. Sometime after award in terms of settlement was passed, the bank issued notice of change dated 19-7-2004 and declared its decision to effect said change i.e. to discontinue the practice of payment of overtime. 3.6. The said notice came to be issued in accordance with Section 116 of the Act read with section 42 of the Act. 3.7. The union felt aggrieved by said decision of the bank and the intimation vide notice dated 19-7-2004 and that therefore union approached learned Labour Court with application under Section 79 read with Section 78 of the Act seeking declaration that the change intimated by the bank amounts to illegal change and the bank should be directed to withdraw the illegal change. The application came to be registered as Application No. 7/2004. 3.8. The union alleged that the decision of the bank and the notice are illegal and unsustainable in view of Section 46(3)(4) and (5) read with Section 47 and 42 of the Act. 3.9. The bank opposed the application. 3.10. After adjudication of the application the learned Labour Court rejected said application vide order dated 29-2-2006 and held that the action of the bank and the notice in question cannot be termed illegal and the action was taken in accordance with section 116 read with Section 42 and 46 of the Act. 3.11. Feeling aggrieved by the said order dated 29-2-2006 the union preferred appeal before Industrial Court. The appeal came to be registered as Appeal No. 9 of 2006. The industrial Court adjudicated appeal and reached to the conclusion that the decision by the learned Labour Court is erroneous and that change effected by the bank is illegal. Industrial Court passed judgment dated 12-6-2007 and set aside the decision by the learned Labour Court and passed above mentioned direction. 4. Mr. Pandya, learned advocate for the petitioner bank assailed the judgment and submitted that the industrial court committed error in holding that the bank had committed illegal change. He submitted that the bank had followed the procedure prescribed under Section 116 read with Section 42 and Section 46 of the Act and after following prescribed procedure the change was effected and that therefore there was no illegality in the action of the bank. He submitted that the bank had followed the procedure prescribed under Section 116 read with Section 42 and Section 46 of the Act and after following prescribed procedure the change was effected and that therefore there was no illegality in the action of the bank. He also submitted that on the date when the bank implemented the change pursuant to the notice, period of settlement had expired and that therefore it was legally permissible to effect change in the terms of the settlement, after following procedure prescribed under the Act. He submitted that the bank had followed all procedure and that therefore as rightly held by the learned Labour Court there was no illegality in respect of the notice and/or with regard to the change effected by the bank i.e. discontinuing overtime payment and to ensure that the bank may not be dragged into liquidation, the said action was very necessary. He submitted that the learned Industrial court has misconstrued the provisions under Section 116, section 46 and section 47 of the Act. He also submitted that learned industrial court ought not have set aside the judgment by learned labour Court. 5. Mr. Mishra, learned advocate for the union submitted that industrial court has not committed any error in passing the direction vide judgment dated 12-6-2007. Learned advocate for the respondent union submitted that the bank effected change without diligently following prescribed procedure. According to the respondent union the action of the bank violated provisions under Section 42 and section 46 and therefore industrial court rightly interfered with the decision by the learned Labour Court and rightly set aside the illegal change committed by the bank. He further submitted that even if the banks case i.e. that the period of settlement had expired is accepted then also the effect of the settlement would continue until other settlement is arrived at, however learned Labour court failed to appreciate said aspect and that therefore the industrial court rightly set aside the order passed by the industrial court. 6. I have considered rival submissions by the learned advocates for the petitioner and the respondent union. I have also considered the judgment passed by learned Labour Court and impugned judgment by the industrial Court. I have also taken into account the material and documents available on record of this petition. 7. 6. I have considered rival submissions by the learned advocates for the petitioner and the respondent union. I have also considered the judgment passed by learned Labour Court and impugned judgment by the industrial Court. I have also taken into account the material and documents available on record of this petition. 7. So as to appreciate the grievance of the petitioner bank against judgment of the industrial court and rival contention it is necessary to take into account the provisions contained under Section 46 of the Act which reads thus : “46. Illegal change:- (1) No employer shall make any change in any standing order settled under Chapter VII without following the procedure prescribed thereof in this Act. (2) No employer shall make any change in any industrial matter mentioned in schedule II- [(ai) before giving notice of the change as required by the provisions of sub-section (1) of section 42:] (i) within the period provided for in sub-section (1) of section 44 unless an agreement is arrived at; [(ii) where no agreement is arrived at before the completion of the conciliation proceedings and during the period of ten days thereafter]; (iii) where no settlement is arrived at, after two months from the date of the completion of the proceeding before the Conciliator; (iv) in case where there is a registered submission or in which the dispute has been referred to arbitration, before the date on which the award comes into operation. [(v) in cases where such matter or a dispute regarding such matter has been referred to a Wage Board for decision, before the date on which the decision comes into operation.] (3) No employer shall make any such change in contravention of the terms of a settlement, [effective award, registered agreement or effective order of decision of a Wage Board] (5) Failure to carry out the terms of any settlement, award, [registered agreement of effective order or decision of a Wage Board], [a Labour Court or the Industrial Court affecting Industrial matter] shall be deemed to be an illegal change.” 7.1. The said section 46 prescribes which “change” will amount to “illegal change” by employer. The said section 46 prescribes which “change” will amount to “illegal change” by employer. According to the said section any change in settled standing order without following prescribed procedure would amount to “illegal change” and if an employer makes any change in any industrial matter covered by schedule-II of B.I.R. Act then any change effected without or before giving notice of change as required by section 42(1) or within period provided for under Section 44(1) of the Act without entering into any agreement or if any change is made in respect of industrial matter covered under schedule-II without complying requirement prescribed under clause (i) to clause (iv) of sub-section (2) of Section 46 of the Act or if any change in contravention of terms of settlement or award is made by the employer or if the employer fails to carry out any terms of settlement or award then such change or action of the employer, then it will tantamount to “illegal change”. Therefore so far as present case is concerned it would be necessary to find out as to whether the petitioner's action of discontinuing payment for overtime falls under any of the items prescribed under sub-section (2) or sub-section (3) or sub-section (5) of section 46, or not. 8. It is also relevant to take into account sub-section (1) and (2) of Section 42. The said provisions read thus:- “42. Notice of change:- (1) Any employer intending to effect any change in respect of a industrial matter specified in Schedule II shall give notice of such intention in the prescribed form the representative of employees. He shall send a copy of such notice to the Chief Conciliator, the Conciliator for the industry concerned for the local area, the registrar, the Labour officer and such other person as may be prescribed. He shall also affixed a copy of such notice at a conspicuous place on the premises where the employee affected by the change are employed for work and at such other place as may be directed by the Chief Conciliator in any particular case. He shall also affixed a copy of such notice at a conspicuous place on the premises where the employee affected by the change are employed for work and at such other place as may be directed by the Chief Conciliator in any particular case. (2) An employee desiring a change in respect of an industrial matter not specified in Schedule I and III shall give notice in the prescribed form to the employer through the representative of employees, who shall forward a copy of the notice to the Chief Conciliator, the Conciliator for the industrial concerned for the local area, the Registrar, the Labour Officer and such other person as may be prescribed.” 8.1 It is noticed on reading Section 46 that the said provision restrains the employer from making any change in respect of any industrial matter specified under Schedule-II, without giving notice as contemplated by section 42(1) of the Act. 8.2. When said sub-section (1) of Section 42 is taken into account it emerges that the section prescribes that any employer who intends to effect any change in respect of industrial matters specified under schedule-II, he shall not make any change without giving notice of intention. On conjoint reading of Section 42(1) with section 46 it comes out that if any change in respect of any industrial matter specified under schedule-II is made without giving such notice of intention then it would amount to illegal change. The said section 42 further prescribes that if any settlement with regard to the notice issued under sub-section (1) of section 42 is not arrived at then fresh notice for such intention can be issued after expiry of the period mentioned under sub-section (3) of Section 42. 9. Before proceeding further it is also relevant to take into account the fact that in present case the award in terms of the settlement came to be passed in reference (IC) No. 3 of 1998 on 27-10-2002. 9.1. It is also not in dispute that according to the bank, it had issued/served notice terminating the settlement/award and intimated its decision about change, on 19.7.2004. 9.2. It is not in dispute that the period of operation of the settlement expired on 31-10-2002. 9.3. It is also not in dispute that the bank had issued the notice under Section 116 of the Act on 19-7-2004 i.e. after period of settlement/award expired. 9.4. 9.2. It is not in dispute that the period of operation of the settlement expired on 31-10-2002. 9.3. It is also not in dispute that the bank had issued the notice under Section 116 of the Act on 19-7-2004 i.e. after period of settlement/award expired. 9.4. It is also not in dispute that the bank effected the change w.e.f. 10-9-2004. 10. In light of the said factual background, it is relevant to take into account that according to sub-section (1) of section 42 if an employer intends to effect any change in respect of an industrial matter mentioned in schedule II of the Act, then before effecting such change the employer must give notice of such intention. 10.1. According to section 46 of the Act the employer cannot effect any change in any industrial matter mentioned in schedule II before giving notice of change as required under sub-section (1) of section 42, within/before the period provided under sub-section (1) of section 44 or before completion of conciliation proceedings or 10 days after completion of conciliation proceedings and any action in violation of such provision would amount to illegal change. 10.2. According to sub-section (3) of section 46 an employer shall not make any change in contravention of any terms of the settlement. 10.3. In light of the said provision, it is appropriate to take into account provision under Section 116 of the Act. The said Section 116 of B.I.R. Act reads thus : “116. Agreement etc., when to cease to have effect:- (1) A registered agreement or a settlement or award shall cease to have effect on the date specified therein or if no such date is specified therein, on the expiry of the period of two months from the date on which notice in writing to terminate such agreement, settlement or award as the case may be, is given in the prescribed manner by any of the parties thereto to the other party: Provided that no such notice shall be given till the expiry of three months after the agreement, settlement or award comes into operation. (2) Nothing in this section shall prevent the terms of a registered agreement or a settlement [or an award in terms of an agreement] being changed or modified by mutual consent of the parties affected thereby [and the registered agreement, settlement or award shall be deemed to be changed or modified accordingly]. (2) Nothing in this section shall prevent the terms of a registered agreement or a settlement [or an award in terms of an agreement] being changed or modified by mutual consent of the parties affected thereby [and the registered agreement, settlement or award shall be deemed to be changed or modified accordingly]. (3) Notwithstanding anything contained in sub-section (1) or (2), If a registered agreement or a settlement or award provides that it shall remain in force for a period exceeding one year, it may after the expiry of one year from the date of its commencement be terminated by either party thereto giving two months' notice in the prescribed manner to the other party. (4) The party giving notice under sub-section (1) or (3) shall send a copy of it to the Registrar and the Labour Officer of the local area concerned. [(4A) A notice given by a party under sub-section (1) or (3) may be withdrawn by it by a subsequent notice given in writing in the prescribed manner before the expiry of two calendar months from the date on which the previous notice was given. The party giving such subsequent notice shall send a copy thereof to the Registrar and the Labour Officer of the Local area concerned]. (5) If a registered agreement, or a settlement or an award is terminated under sub-section (1) or (3) or if the terms of a registered agreement, or a settlement [or an award] are changed or modified by mutual consent, notice of such termination, change or modification shall be given by the parties concerned to the Registrar and the Labour Officer. The Registrar shall enter the notice of such termination, change or modification in a register kept for the purpose. Explanation: For the purposes of this section, parties who shall be competent to terminate a registered agreement or a settlement or award, or to change or to modify the terms of a registered agreement or a settlement [or an award] and who shall give notice of such termination, change or modification under sub-section (5) shall be the employer who has signed the agreement or settlement or who is a party to the award or the heirs, successors or assigns of such employer in respect of the undertaking concerned and the representative of the employees affected by the agreement, settlement or award.” 10.4. According to sub-section (1) of section 116 a settlement or award shall cease to have effect on the date specified in the settlement or award and in cases where date is not specified, on expiry of two months from the date on which the notice in writing to terminate the settlement or award is issued by the employer. 10.5. In present case it is relevant to note that the settlement and consequently the award (which was passed in terms of settlement) expressly specified the period of operation of the settlement/award inasmuch as according to the terms of the settlement the life/period of the settlement/award was to expire on and from 30.10.2002. Thus, in present case first part of sub-section (1) of section 116 will be applicable. 10.6. Consequently, in light of section 116(1) the settlement/award would cease to operate from the date specified therein and that therefore in present case also the settlement/award in terms of the settlement ceased to operate from the date mentioned in the settlement. 10.7. Now, it is relevant to take into account the provision under sub-section (3) of section 116 which prescribes, inter alia, that:- 3....settlement or award which prescribes that it shall remain in force for a period exceeding one year, may be terminated after expiry of 1 year by giving 2 months' notice.” 10.8. Thus, what emerges from the said provision is that even those settlement or award which prescribe period of operation and provide that the settlement/award will remain in force for period of more than 1 year can be terminated before prescribed period of operation, however after completion of 1 year from the date of settlement. In the event any party to the settlement which has tenure of more than 1 year intends to terminate such settlement/award before prescribed period of operation (but after completion of 1 year) then it must give notice of such intention. 10.9. Conjoint reading of sub-section (3) and sub-section (1) of section 116 clarifies that such notice would not be necessary in the cases where prescribed period for operation of settlement/award has naturally expired. In present case it is pertinent to note that the period/tenure of the settlement/award expired on 30-10-2002 i.e. tenure naturally came to end (by virtue of provision under the settlement) on 30-10-2002. In present case it is pertinent to note that the period/tenure of the settlement/award expired on 30-10-2002 i.e. tenure naturally came to end (by virtue of provision under the settlement) on 30-10-2002. Thus, the settlement as well as its effect had expired since 30-10-2002 and on the date when the Bank discontinued overtime payment i.e. 10-9-2004, the settlement was not in operation and almost two years had passed since the settlement and its effect had expired. According to the Act Notice of intention would be necessary when settlement/award is alive and the settlement and its effect are in operation whereas in present case both i.e. the settlement and its effect had expired long back (i.e. before two years). 10.10.. After expiry of the period of settlement/award on 30-10-2002 the effect of the settlement/award had also expired and it was only in light of “floating effect” that the petitioner Bank had continued to pay benefits in consonance with the settlement (so that void may not be created in absence of fresh settlement/award). 10.11. If an employer effects any change in respect of any matter covered by settlement/award after natural expiry of period of settlement and its effect, then he cannot be held guilty or responsible for “illegal change” on the ground that he effected the change without notice contemplated under Section 46 read with Section 42 and Section 44 of the Act or before the period of the Notice and the provision under Section 116 (1) and (3) must also be kept in focus and should be taken into account because the said provisions i.e. Sections 42, 46 and 44 contemplate/provide for Notice when settlement/period of settlement is alive and has not expired. 10.12. The provision related to “illegal change” must be and needs to be construed carefully and strictly because action committing/effecting illegal change tantamounts to offence and entails criminal liability/consequences. 10.13. In present case even the floating effect ceased to operate when the employer issued notice dated 19-7-2004. Even if it is assumed that floating effect of the settlement/award would continue even after notice dated 19-7-2004 then also such floating effect would cease to operate from 18-9-2004. 10.14 Despite such fact the petitioner employer issued and served notice terminating settlement/award on 19-7-2004 i.e. almost 2 years after period of settlement/award had expired. Even if it is assumed that floating effect of the settlement/award would continue even after notice dated 19-7-2004 then also such floating effect would cease to operate from 18-9-2004. 10.14 Despite such fact the petitioner employer issued and served notice terminating settlement/award on 19-7-2004 i.e. almost 2 years after period of settlement/award had expired. In this view of the matter even if the requirement of notice terminating the settlement/award is applied in present case then also the settlement/award would cease to have effect on expiry of 2 months from the date of the notice. Such period would come to end on 18-9-2004. 10.15. Learned Labour Court has taken into account said aspect however, learned Industrial Court failed to consider relevant aspects, more particularly the Industrial Court failed to appreciate the applicability and effect of section 116 to the facts of the case. 11. In present case it is also relevant and necessary to keep in focus that at the time when bank issued the notice it was passing through serious financial crises and the bank had already incurred accumulated loss of about 100 Crores. Said aspect is taken note by the learned Labour Court in the judgment dated 29-4-2006. 12. Under the circumstances in present case it cannot be said that the action of the bank to seek change i.e. to seek discontinuation of practice of overtime payment was unjustified. 13. At this stage it is relevant to note that the learned Labour Court has mentioned relevant fact in the judgment viz. that the bank had stopped payment of overtime from 10-9-2004. 13.1. The said action of the bank is construed as illegal change. Actually, in light of Section 116(1) read with Section 116(3) and in view of the fact that the period of settlement/award expired in October 2002, the bank's action which commenced on and from 10-9-2004 i.e. about 2 years after the effect of settlement expired, would not amount to illegal change. 13.2. However, even if the action of discontinuing the payment of overtime from 10-9-2004 is construed to be illegal, then also alleged illegality would cease on and from the date when the two months’ period from the date of notice expire i.e. 18-9-2004. 14. 13.2. However, even if the action of discontinuing the payment of overtime from 10-9-2004 is construed to be illegal, then also alleged illegality would cease on and from the date when the two months’ period from the date of notice expire i.e. 18-9-2004. 14. In such circumstances and having regard to the fact that the bank was passing through serious financial crisis and also having regard to the fact that the bank had already issued notice in compliance of Section 116, the learned Industrial Court could have, at the most, directed the bank to pay overtime wages to those employees who had actually worked overtime during the period from the date when the bank stopped payment of overtime until the date when period of two months from the date of notice expired and there was no need or justification to restore the position prior to 10-9-2004 on the ground that the bank committed illegal change. 15. The judgment and order by the learned Industrial Court is erroneous and contrary to provisions under Section 116 and it is based on misconstruction of Section 42 and Section 46 read with Section 116 of B.I.R. Act. The decision by the learned Labour Court is required to be restored. 15.1. Though in light of the facts of the case and in light of section 116(1) and (3) the Bank's action, as rightly held by the labour Court, would not tantamount to illegal change, however with a view to striking balance it is clarified that those employees who had actually worked overtime from the date on which the bank stopped payment of overtime until the date on which two months’ period from the date of notice expired, will be entitled for payment of overtime wages for the said period i.e. until actual completion of 2 months from the date of Notice which was issued by the Bank. With the aforesaid clarifications and observations, the petition is partly allowed. The judgment and order dated 12-6-2007 passed by Industrial Court in Appeal (I.C.) No. 9 of 2006 is set aside and the judgment and order dated 29-4-2006 passed by the learned Labour Court is restored. Rule is made absolute to the aforesaid extent. Petition partly allowed.