NEW STANDARD ENGINEERING CO. LTD. versus N. L. ABHYANKAR AND ORS.

Citation: [1978] 2 S.C.R. 798 · Decided: 02-02-1978 · Supreme Court of India · Bench: P.N. BHAGWATI · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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B 
798 
NEW STANDARD ENGINEERING CO. LTD. 
v. 
N. L. ABHYANKAR AND ORS. 
February 2, 1978 
(P. N. BHAGWATI, P. N. SHINGI-IAL AND JASWANT SINGH, JJ.J 
lnd11strial Disp11Jes Act 1947~Sec. 2(p) S. l8-Settl!!111t·11t arrived at after 
tlie award and during pe11de11cy of Writ Peririon oj company 
in 
the High 
Court-Tests for determining reasonableness and fairness of settlement. 
The Government of Maharashtra referred to the Industrial Tribunal the 
dispute betwern the New Standard Engineering Co. Ltd. and its workmen for 
adjudication under section 10( 1 )(d) of the Industrial Disputes Act 1947. The 
C 
Tribunal gave ·its award in November, 1972, and it directed that the revised wage 
scales and the scheme of denrness allowance shall come into force 
with 
re-
trospective effect from 1st of January, 1968. The Co11tpany challenged the 
award in the High Court by a petition under Articles 226 and 227 of the Con-
stitution which was fixed for hearing on 30-7-1973. 
A settlement was arrived 
at between the company and the Bhartiya Kamgar Sena (respondent No. 
3 ) 
on 31-7-1973 but the application for adj'ournment was refused. 
The dicl'ation 
of the judgment commenced on 31-7-1973 and was concluded 0.1 1st August, 
1973. 
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F 
G 
II 
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One of the poin!s urged in the High Court W ;)S th:1t th:.: Comp<.>.1y had arriv-
ed at the settlement and award may be made in terms of that settlement or a 
direction may be given to the Tribunal to consider whether the settlement was 
fair and reasonable. The High Court held that the alleged settlement was not 
"' settlement under section 2(p) of the Act it was not open to it to take 
notice of it in proceedings u'nder Articles 226 and 227 of the Constit1nion. 
It 
therefore thought it proper to dispose of the petition on merits rather than 
leave it to uncertainty and inter-union rivalry which may lead to industrial 
unrest, 
The Company filed an appeal in this Court by Special Leave. This Court 
sent the matter to the Tribunal for finding whether the settlement arrived at 
by the Company and responden~ No. 3 wasl under section 2(p) of the Act, 
whether the settlement was entered into voh.:~ltarily and whethi.!r it was just 
and fair. The Tribunal found that out of 1328 workmen who were in service 
on 31-7-1973, 995 workmen had signed the settlement and had al~o accepted, 
their dues thereunder. and 242 workmen. had only accepted their dues under 
the settlement by sif,\ling receipts though they did not sign the settlemen~. 
The Counsel for respondent No. 2 contended that the settlement dated 
31-7-1973 was not just r.nd fair. The Counsel further argued that while under 
the n.ward the increased rates were admissible from January, 1968, the settle-
ment put that off to January. 1973 and was, therefore. unjust and unfair. It 
was also cc•.1tended that by the settlement the amount of arrears payable was 
reduced from Rs 4(} lakhs to Rs. 11.5 -lakhs. 
On the other hand Counsel for 
the Compi:>•ny pointed out with reference to the bala'flce sheets that the Com-
pany had paid all its tax and other liabilities which were beyond recall ~ind that 
during the period from 1968 to 1972 i.t.had only a net surplus of Rs. 5.11 lakhs, 
and that the Company had agreed to pay about Rs. 11.56 lakhs in addition to 
the difference in dearness allowance amounting to Rs. 3.64 lakhs which had 
already been paid to the workmen. 
It was stated that the 
Company had 
exceeded its borrowing limit and it was not possible to pay more than what it 
had agreed to pay under the settlement. 
Allowing the appeal, 
HELD : 1. Settlement of labour disptites by direct negotiation or settlement 
through collective bargaining is always to be referred .for it is the be't ~aran­
tce of industrial peaee which is the aim of all legislation for settlement of 
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NEW STANDARD ENGG. co. v. N. L. AB.HYANKAR (Shinghal, J.) 799 
labour disputes. 
In order ·to bring about such a settlement n1ore c2,')ily and 
to inake it more workable and effective, it is no longer necessary under the law 
that rhe settlemen~ should be confined t<l that arrived at in the course of a 
conciliation proceeding, but now includes by virtue of the definition In Section 
2(p) of the Act, a written agreement between t•he emoloyer and the work-
man arrived at otherwise than in the course of conciliation proceedings i,.vhere 
such <1greement has been signed by the parties in the prescribed n1r.•.1ner aond a 
copy thereof has been sent to the 

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