Karnataka High Court Issues Guidelines For Subsequent Reference To Labour Court After Either Party Disputes Earlier Settlement

The Karnataka High Court has held that if a dispute is raised questioning the validity of a settlement under Section 12(3) of the Industrial Disputes Act 1947, before a conciliation officer, the appropriate Government is required to assign reasons for referring it to adjudication.

Justice Anant Ramanath Hegde held thus while partly allowing the petitions filed by the Management of Bosch Ltd which had challenged the order dated 28.06.2021, passed by the appropriate Government, referring the dispute raised by around 160 workmen for adjudication before the labour court.

The bench said, “Where at least one of the parties alleges that settlement is recorded under Section 12(3) of the Act, 1947, in the presence of the Conciliation Officer, and the other party disputes it, the standard of scrutiny required to be undertaken by the appropriate Government under Section 12(5) is couple of degrees higher, as compared to disputes not emanating from a settlement under Section 12(3) of the Act, 1947.”

Further, it clarified that the appropriate Government has to not adjudicate on the merits of the settlement arrived at before the Conciliation Officer. Such an exercise is not permissible given the scope of Section 12(5) of the Act, 1947.

It laid down the following guidelines to be followed by the appropriate Government to prima facie satisfy itself, for referring the matter to the labour court for adjudication:

(i) The settlement has resolved all the disputes which were the subject matter of the conciliation proceeding.

(ii) Any dispute that is the subject matter of a conciliation proceeding is still unresolved, despite settlement.

(iii) The settlement said to have been arrived at, prima facie, contravenes any of the provisions of the Act, 1947 or the binding Standing Orders?

(iv) The settlement is duly signed by parties to the settlement or authorised persons representing the parties?

(v) The settlement on the face of it, on account of the efflux of time, appears to have been acted upon?

The bench said “On the above consideration, the Government has to satisfy itself as to whether the matter requires to be referred to for adjudication or not, and then has to pass an appropriate order.”

It added “This Court is not holding that in case the dispute is raised relating to the settlement under Section 12(3) of the Act, 1947, the Government has no power to refer the dispute to the Tribunal or the Labour Court, but only adding that in such situation, the appropriate Government has to consider the above noted factors before taking a call as to whether the dispute has to be referred for adjudication or not.”

Case Background:

An industrial dispute arose between the Workmen and the Employer on the premise that the Workmen were denied employment from 16.08.2015. Before the Conciliation Officer, proceedings were held, and on 01.10.2016, the Conciliation Officer recorded that the conciliation failed and referred the matter to the appropriate Government.

It appears, parties thought of amicably negotiating a workable solution, and at the intervention of the minister for the concerned Industry, the conciliation 73 proceeding resumed before the jurisdictional Deputy Labour Commissioner. In the said proceeding, on 08.02.2017, the settlement was recorded. Workmen received Rs 14 lakhs each towards the full and final settlement of their claim. Receipt of Rs.14 lakhs each by the Workman is not in dispute. Some of the Workmen raised an industrial dispute questioning the validity of the settlement. They even questioned the validity of the settlement dated 08.02.2017.

The counsel appearing for the company argued that the settlement dated 08.02.2017 is voluntarily executed in the presence of a Conciliation Officer. The settlement is binding on the Workmen in view of the mandate of Sections 18 and 19 of the Act, 1947. Having received Rs.14.00 lakhs, as agreed in the year 2017, it is not open to the Workmen to file Writ Petitions in the year 2021 alleging that the workmen were forced to sign the terms of the settlement under force, coercion, and threat. Moreover, in view of the settlement dated 08.02.2017, the Industrial Dispute does not exist between the Workmen and the Employer, as the relationship of employer and employee has come to an end by way of an amicable settlement.

Findings:

The bench on going through the record noted that the Conciliation Officer concluded that the conciliation failed and sent a report on 01.10.2016 to the Additional Chief Secretary, Department of Labour, to take further action for referring the dispute for adjudication. One more conciliation proceeding was held at the request of both Workmen as well as the Employer at the intervention of the Minister for Minimum and Large-Scale Industries. Employer claimed that second conciliation initiated at the request of both the Employer and the Workmen ended in a settlement as recorded on 08.02.2017.

Further, it is admitted that the settlement dated 08.02.2017 is signed by the Workmen. Each Workman has received Rs.14 lakhs as a severance package.

The bench referring to provisions of the Act said “There is no provision in the Act, 1947, that prevents or prohibits the appropriate Government from referring the matter back to the Conciliation Officer if there is a joint request by both parties to have one more conciliation proceeding before the Conciliation Officer. It is equally true that there is no embargo on the parties to make a joint request for one more attempt for conciliation in the presence of a Conciliation Officer, in case the conciliation failure report is already sent by the Conciliation Officer to the appropriate Government.”

Emphasising that the philosophy of the Act, 1947, which gives primacy to amicable resolution of industrial disputes. The Act, envisages preference to conciliation to resolve the industrial disputes resulting in a win-win situation for both Workmen and the Establishment, in the presence of a neutral Conciliator, rather than adjudication in the Labour Court/Tribunal. The concept of dispute resolution through conciliation has been in the Scheme of the Act, 1947, since its inception.

The bench said “The interpretation that the appropriate Government cannot entertain a joint request for a fresh conciliation proceeding if a conciliation failure report is already sent to the Government has no legal support. Such an interpretation is not desirable either, in an era where the stress is on alternative dispute resolution mechanisms like mediation and conciliation.”

It clarified that such an exercise for second conciliation proceeding is not permissible at the request of only one party. It has to be on the request of the application by both parties.

Further it held “The Conciliation Officer has the jurisdiction to hold a second conciliation proceeding on the joint request by the parties to hold one more conciliation, even if he has sent a failure report under Section 12(4) of the Act,1947.

Noting that the reference orders in the present case do not indicate whether prima facie satisfaction is arrived at by the appropriate Government before referring the dispute. In two of the reference orders the point for consideration is not raised on the validity of the settlement dated 08.02.2017.

The bench said, “No doubt, the settlement said to have been entered into between the Workmen and the Employer theoretically operates forever, but that cannot be treated as an absolute bar to question the validity of the settlement if valid grounds exist to question the settlement recorded under Section 12(3) of Act, 1947.”

It then rejected contention that the appropriate Government cannot refer a dispute questioning the settlement under Section 12(3) of the Act, 1947.

Accordingly it set aside the reference order passed by the government and remitted the disputes back to the appropriate Government, to pass orders on the disputes raised, keeping in mind the guidelines recorded in this judgment, within thirty days. It dismissed the petitions filed by the workmen without entering into merits of the contentions on threat and coercion, as it involves seriously disputed facts

Appearance: Senior Advocate Pramila Nesargi a/w Advocate SRU George Anthony Cruz for Petitioners.

Senior Advocate Kasturi a/w Advocate Subha Ananthi for R1 TO R4.

AGA Prince Issac for R5 & R6.

Citation No: 2025 LiveLaw (Kar) 274

Case Title: Ramamurthy C K & Others AND Bosch Limited & Others

Case No: WRIT PETITION NO.17695 OF 2021 (L-RES) C/W WRIT PETITION NO.12656 OF 2021 (L-RES) WRIT PETITION NO.21703 OF 2021 (L-RES) WRIT PETITION NO.23395 OF 2021(L-RES) WRIT PETITION NO.23730 OF 2021(L) WRIT PETITION NO.23786 OF 2021(L-RES) WRIT PETITION NO.1434 OF 2022

Click Here To Read/Download Order