UNION OF INDIA & ANR. versus MAJUR MAHAJAN MANDAL & ORS.

Citation: [1977] 2 S.C.R. 472 · Decided: 16-12-1976 · Supreme Court of India · Bench: P.K. GOSWAMI · Disposal: Dismissed

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Judgment (excerpt)

A 
B 
c 
D 
E 
F 
G 
472 
UNION OF INDIA & ANR. 
v. 
MAJUR MAHAJAN MANDAL & ·oRS. 
December 16, 197 6 
[P. K. GoswAMI ANDS. MuRTAZA FAZAL Au, JJ.J 
Additional Emoluments (Compulsory Deposit) Act, 1974-s. 2(b)-"Sanc· 
tioned" meaning of. 
. 
Section 2(b) of the Additional Emoluments (Compulsory Deposit) 
Act,. 
1974 defines additional dearness allowance to mean such dearness allowance 
as may be sanctioned from time to time after the appointed day, i.e., July 6, 
1974 over and above the amount of dearness allowance payable in accordance 
with the rate in force immediately before the date from which such sanction• 
of additional dearness allowance is to take effect. Section 6(2) (b) enjoins, 
on the employer the duty to make deductions and to remit to the nominated 
authority additional dearness allowance from the emoluments disbursed after 
the appomted day. Section 115A of the Bombay Industrial Relations Act, 1946 
provides that if any agreement is arrived at between the employer and employe-
es who are parties to an industrial dispute pending before the industrial court, 
the award in such proceeding shall be made in terms of such agreement, except 
in certain circumstances stated therein. 
As a result of negotiations between the employers and employees a settle-
ment was entered into between the parties on June 28, 1974 enhancing the 
dearness allowance with retrospective effect from January 1. 1974. The Indus-
trial Court before which certain disputes were pending gave the award in 
conformity with the settlement sometime in August-September, 1974. 
Arrears 
of dearness allowance were paid after the appointed day. 
In a petition under Article 226 of the Constitution by the employees' Union; 
the High Court issued a writ restraining the employers from effecting any deduc-
tion from the arrears of D.A. payable to the employees on the basis of the 
settlement and granted certain other reliefs. 
In apoeal it was contended that since the settlement of June 28. 1974 could 
not be effective prior to the award made in August-September 1974 additional 
dearness allowance could be said to be sanctioned only after the award and so 
the provisions of s. 2 (b) would be attracted. 
Dismissing the appeal 
HELD : One of the components of cl. 2(b) namely, that the 
additional 
dearness allowance is that part of the D.A. which is 
sanctioned 
after 
the 
appointed day, is absent since there was no sanction for any rise iii. aearness 
allowance after the appointed day. 
[477 G] 
(1) According to s. 11 SA of the Bombay Industrial Relations Act if the 
conditions enumerated therein did not exist the award "shall be made" in terms of 
the settlement. Smee the settlement in this case had merged in the award, the 
terms of the award are those specified in the settlement. The sanction of the award 
in such a case was the sanction under the settlement and since the settlement 
was prior to the appointed day, additional dearness allowance could not 
b~ 
said to be sanctioned after the appointed day. [476 F & H] 
In the instant case the Industrial Court having passed the award in conform-
ity with the terms of the settlement, the award came into operation on the dat~ 
specified in it. 
(2) Sanction must have relevance to the reality of the transaction between 
the parties. Increased dearness allowance payable between January 1, 1974 and 
July 5, 1974 was sa!'ctioned prior t!' th~ appointed day. 
Once it is found that 
the sanction was pnor to the appomted day, s. 2(b) would not be attracted. 
[477 c & Fl 
! 
I 
\ 
• 
UNION v.'MAJUR MAHAJAN M:ANDAL (Goswami, J.) 
473 
(3) From the definition of "additional wages" ins. 2(c) it is clear that the 
Act recognises agreements and settlements m the same way as awards 
of 
Tribunals. Any wage revision .. whether by or unaer au 11greement or settle:· 
mem b~twcen !lie parties or any award" comes wi~in the sw~ep of the defi!Jl· 
tion clause. Agreements and settlements are d1sum:tly mentioned alo,ng wit~ 
awards. Settlement is a type of sanction recogn~sed under the Act. 
l nere l• 
therefore sufficient warrant under the Act to g1 ve ett:ct to the. sa.nct1?n by 
voluntary settlement in respect of D.A. 
When there is. no amb1gmty 1.n the 
word "sanctioned" in ~. 2(b) recourse to the aim and ob1ect of the Act IS not 
called for. [478 A-Bl 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 690 of 1976. 
Appeal from the Judgment and Order dated the 16th December, 1975 of 
the Gujarat High Court in Special Civ

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