- (1.) JANARDAN Sahai, J. On the basis of a settlement dated 5. 1. 2005 between the petitioner M/s. Triveni Glass Limited (hereinafter referred to as the 'employer') and its workmen, a dispute was referred to arbitration of the Deputy Labour Commissioner under Section 5-B of the U. P. Industrial Disputes Act. The dispute which was referred was whether the termination of the services of. the 50 workmen of Plant No. 1 was justified or legal and if not so what relief the workmen were entitled to. The Deputy Labour Commissioner gave his award dated 30. 10. 2006 said to have been served upon the petitioner by letter dated 21. 9. 2007. The Arbi trator found that the services of the workmen were terminated on account of illegal closure of Plant No. 1 without obtaining permission of the State Govern ment under Section 6-W read with Section 6-V of the U. P. Industrial Disputes Act and he directed that the workmen be reinstated with full back wages. Before the Arbitrator, the employer and the employees represented by M/s. Triveni Sheet Glass Workers Union, had filed their respective written statements. The case of the employer was that it has established five different independent plants for manufacture of glass by different processes apd each of the Plants was a sepa rate establishment there being no functional integrality amongst the plants and as there were less than 300 workers in Plant No. 1, no permission for closure was required under Section 6-W of the U. P. Industrial Disputes Act. The Arbitrator, however, found that the five plants were in fact undertakings of the same industrial establishment and the total number of workmen employed in these five Plants together being more than 500, permission for the closure under Section 6-W read with Section 6-V of the U. P. Industrial Disputes Act was required to be taken.
(2.) I have heard Sri Navin Sinha, Senior Advocate assisted by Sri Vipin Sinha for the employer-petitioner and Sri Rama Kant Misra assisted by Sri U. K. Misra for the respondent-workmen. To appreciate the contention of the counsel for the parties it is necessary to refer to certain facts. On 14. 5. 1998 a fire broke out in Plant No. 1 on account of which manufacturing activity therein had to be stopped resulting in lay off of the workmen of Plant No. 1. The agitation that followed led to certain settlements. In the settlement dated 6. 10,1998 it was agreed that some of the workmen of the Plant No. 1 would be laid off while others were to be given alternative jobs in other plants. According to the employer the efforts to revive the Plant No. 1 became impossible and its closure was declared with effect from 1. 7. 2002. The clos'ure was followed by a settlement dated 9. 8. 2002, the terms of which are of some consequence to this case and as such are being briefly recited. It was agreed that the workmen of Plant No. 1- (a) shall be paid full wages till 31st July, 2002, (b) they be discharged only after payment of their dues, (c) till they are dis charged, they will draw salary as payable, and (d) they will be removed in a phased manner as and when their dues are paid. The employers claim that in pursuance of this settlement 44 workmen were removed in the first phase after payment of their dues in full satisfaction. The arbitrator's finding however is that the employers were unable to establish that the services of these workmen were terminated in accordance with the settlement. According to the employers in their written statement 80 workmen of Plant No. 1 were to be discharged in the second phase and notice was given to terminate their services with effect from 24. 1. 2004 but it appears that disputes arose and two fresh settlements were entered into on 20. 2. 2004 by which wages were revised, the 80 workmen were to be engaged for two months and the parties were to abide by the decision of the 'punch' as advised by the Labour Commissioner. Another settlement was thereaf ter entered into on 5. 1. 2005. It was in pursuance of this settlement that the dis pute was, referred to the arbitration of the Deputy-Labour Commissioner. It is said that out of the 80 workmen whose services were to be terminated in the second phase, 23 workmen in the first instance and 7 thereafter took their dues and, therefore, there were left only 50 workmen in respect of whom the reference was confined. On behalf of the employers it was submitted : (A) That the only question which could have been adjudicated by the Arbitrator was whether the termination of services of the workmen was in accordance with the terms of the settlement dated 9. 8. 2002 and that the validity of the closure could not have been examined. (B) that the question of. legality of the closure was outside the scope of the reference. (C) that there was no functional integrality between the five Plants, each of which were independent units and no permission was therefore required. (D) that the financial condition of the industry was very poor; the Plants had been closed; the industry was dead and the Arbitrator has erred in grafting reinstatement with full back wages (E) that the Labour Court had given its award against the workmen and the present proceedings were barred by resjudicata. Each of these points shall be taken up in the sequence in which submissions were made. , The submission of the petitioner's counsel is that in the settlement dated 9. 8. 2002 it was agreed that the services of the workmen would be terminated in a phased manner after clearing off their dues and all that had to be seen by the Arbitrator was whether the services of the workmen of Plant No. 1 had been terminated in accordance with the settlement dated 9. 8. 2002, which was binding upon the parties having been arrived at in the course of conciliation proceedings and to which the provisions of Section 6- B of the U. P. Industrial Disputes Act were not applicable and that in view of the settlement arrived at the question of the validity of the closure could not have been gone into. The finding recorded by the Arbitrator about this settlement is that it did not bear the seal and signatures of the conciliation officer and, therefore, could not be regarded as a settlement made during the course of conciliation proceedings. The finding of the Arbitrator is chal lenged on the ground that there is no requirement under law for the settlement to be signed by the conciliation officer and that the recitals in the settlement them selves indicate that it was entered into during the course of the conciliation pro ceedings. It is, however, not necessary to go into this question as it appears that a settlement cannot over ride the imperative provisions of obtaining permission before closure under. Section 6-W of the U. P. Industrial Disputes Act. In Oswal Agro Furane Ltd. and another v. Oswal Agro Furane Workers Union and others, AIR 2005 (SC) 1555 the apex Court considered this question in the context of Section 18 (3) of the Industrial Disputes Act (Central), which gives binding effect to a settlement arrived at in the course of conciliation proceedings. It was held by the apex Court that a settlement within the meaning of Section 2-P read with sub section (3) of Section 18 of the Act undoubtedly binds the workmen but the provi sions of Section 25-O of the Industrial Disputes Act, 1947 (analogous to Section 6-W of U. P. Industrial Disputes Act) and those of Section 25-N would prevail over the settlement and that obtaining of prior permission before closing down an undertaking is imperative in character. The provisions of Section 25-O of the Cen tral Act are in pan materia with Section 6-W of the U. P. Industrial Disputes Act. The decision would therefore apply to Section 6-W of the U. P. Act also. The ratio of the decision is based upon public policy and upon the principle that a settle ment though statutorily recognised is founded essentially in contract and a con tract cannot prevail over the consequences which the statute provides for breach of such of its provisions as are imperative. Paras 15 and 16 of the Supreme Court's judgement in Oswal Agro Furane Ltd. , which lay down the law upon the subject are quoted as follows : "15. A settlement within the meaning of Section 2 (p) read with sub section (3) of Section 18 of the Act undoubtedly binds the workmen but the question which would arise is, would it mean that thereby the provisions contained in Sections 25-N and 25-O are not required to be complied with? The answer to the said question must be rendered in the negative. A settle ment can be arrived at between the employer and workmen in case of an industrial dispute. An industrial dispute may arise as regards the validity of a retrenchment or a closure or otherwise. Such a settlement, however, as re- gards retrenchment or closure can be arrived at provided such retrenchment or closure has been effected in accordance with law. Requirements of issu ance of a notice in terms of Sections 25-N and 25-O, as the case may be, and/or a decision thereupon by the appropriate Government are clearly sug gestive of the fact that thereby a public policy has been laid down. The State Government before granting or refusing such permission is not only required to comply with the principles of natural justice by giving an opportunity of hearing both to the employer and the workmen but also is required to assign reasons in support thereof and is also required to pass an order having regard to the several factors laid down therein. One of the factors besides others which is required to be taken into consideration by the appropriate Govern ment before grant or refusal of such permission is the interest of the work men. The aforementioned provisions being imperative in character would pre vail over the right of the parties to arrive at a settlement. Such a settlement must conform to the statutory conditions laying down a public policy. A con tract which may otherwise be valid, however, must satisfy the tests. of public policy not only in terms of the aforementioned provisions but also in terms of Section 23 of the Indian Contract Act. 16. It is trite that having regard to the maxim "ex turpi causa non oritur actio" an agreement which opposes public policy as laid down in terms of Sections 25-N and 25-O of the Act would be void and of no effect. Parliament has acknowledged the governing factors of such public policy. Furthermore, the imperative character of the statutory requirements would also be borne out from the fact that in terms of sub-section (7) of Section 25-N and sub section (6) of Section 25-O, a legal fiction has been created. The effect of such a legal fiction is now well known. "
(3.) THE consequence of closure without application for permission for closure or despite refusal of permission is provided in sub-section (6) of Section 6-W of the U. P. Industrial Disputes Act and that consequence is that the closure would be illegal and the workmen would be entitled to all the benefits under any law in force as if the undertaking had not been closed down. This irresistible conse quence which flows out of sub-section (6) of Section 6-W cannot be washed away or diluted by any settlement. A settlement is founded on contract and al though stands on high pedestal in Industrial law would crumble down when it runs counter to the legal fiction envisaged in Section 6-W that a closure without per mission is illegal from the very inception and the workmen would be entitled to every benefit they are entitled to under the law. THE Industrial Disputes Act was enacted to prevail over the law of contract governing rights of employer and work men. It would be a contradiction to suggest that the basic rights created by the Act can be done away with under the very law-of contract which the Act intends to override. Even collective bargaining recognized by the Act has its limitations. Benefits conferred upon the workmen for breach of imperative provisions of the Act cannot be bartered away even by collective bargaining. THE contention of the employer's counsel that the settlement dated 9. 8. 2002 is the Magna Carta of the rights of the parties to which the parties must alone look up to for basing their claim is therefore misconceived. The petitioner's counsel submitted that the Arbitrator has decided the ques tion of validity of the closure, which was not a question referred to him nor was the closure ever challenged before any forum. In support of his contention that the Arbitrator cannot decide an issue, which has not been referred to him, reliance was placed by the learned counsel upon three decisions: (1) M/s. Firestone Tyre and Rubber Co. of India (P) Ltd. v. The Workmen Employed represented by Firestone Tyre Employee's Union, AIR 1981 SC1626 (para 9), (2) Pottery Mazdoorpanchayat v. Perfect Pottery Co. Ltd and another, AIR 1979 SC 1356 (Para 11) and Delhi Cloth and General Mills Co. Ltd. v. The Workmen and others, AIR 1967 SC 469 (Para 9);