1976 (11) TMI 198 - SC - Indian Laws

Supreme Court Upholds Validity of Collective Bargaining Agreement, Emphasizing Fairness and Completeness

Herbertsons Limited Versus Workmen Of Herbertsons Limited And Ors

The Supreme Court held that the disputed settlement was valid and binding on all workers, emphasizing the significance of collective bargaining over ... - Issues Involved:1. Validity and binding nature of the disputed settlement.2. Fairness, justness, and reasonableness of the disputed settlement.3. Completeness of the disputed settlement.4. Principles applicable in granting dearness allowance to workers.Analysis of Judgment:1. Validity and Binding Nature of the Disputed Settlement:The Tribunal found that the disputed settlement was not valid and binding on the members of the Mumbai Mazdoor Sabha (Respondent No. 2). The Supreme Court, however, emphasized that when a recognized union negotiates with an employer, individual workers do not come into the picture. The settlement, being a product of collective bargaining, is entitled to due weight and consideration. The Court noted that the 2nd respondent did not produce evidence to show the number of workers who were its members and who could assert that the settlement was not binding under section 18(1) of the Industrial Disputes Act. The Court concluded that the settlement was binding on all workers, given that the majority had accepted it and received the arrears and emoluments accordingly.2. Fairness, Justness, and Reasonableness of the Disputed Settlement:The Tribunal found that the scheme of dearness allowance (D.A.) provided in the disputed settlement was not fair, just, and reasonable, particularly for workmen at or just above the subsistence level. However, the Supreme Court disagreed, stating that the settlement must be judged as a package deal. The Court highlighted that the settlement had provided better terms in wages, and even if there was some reduction in D.A., it did not make the settlement unfair or unreasonable. The Court emphasized that settlements in collective bargaining should be encouraged and judged in the spirit of mutual give and take, rather than strictly by adjudication principles.3. Completeness of the Disputed Settlement:The Tribunal held that the disputed settlement was incomplete because the terms and conditions for a small number of seasonal casual workmen were left to be mutually decided by the parties. The Supreme Court, however, noted that some terms had been settled for this category by mutual agreement. The Court concluded that the settlement could not be deemed bad on account of this minor incompleteness.4. Principles Applicable in Granting Dearness Allowance:The Tribunal applied principles from the Killick Nixon Limited case, advocating for cent percent or at least 95% neutralization of the cost of living in D.A. The Supreme Court clarified that while these principles are relevant for adjudication, they do not necessarily apply to voluntary settlements. The Court emphasized that settlements should not be judged by the strict principles of adjudication but by the mutual benefits and the spirit of collective bargaining. The Court found that reducing the D.A. to 85% and 87.5% did not render the settlement unfair or unjust, especially when considering the overall benefits and the context of the settlement.Conclusion:The Supreme Court upheld the disputed settlement as fair and just, substituting the award of the Tribunal with the settlement dated October 18, 1973. The appeal was disposed of with no order as to costs. The judgment emphasized the importance of collective bargaining and the need for industrial peace and harmony.