Markandeya Katju, C.J.
1.This writ appeal has been filed against the impugned judgment of the learned Single Judge dated 24.4.2003. Heard learned counsel for the parties and perused the record.
2.The facts in detail have been stated in the judgment of the learned Single Judge and hence we are not repeating the same except where necessary.
3. The appellant had filed a writ petition for a writ of certiorari to quash the order dated 25.5.2000 issued by the Secretary, Ministry of Labour, Government of India declining to make a reference under Section 10 of the Industrial Disputes Act, 1947. The petitioner has also prayed for quashing of the circular dated 7.1.1993.
4. The petitioner appellant is a union of bank employees. It is alleged in para 3 of the writ petition that the bank had employed a number of persons from time to time. A circular dated 7.11.1986 was issued by the bank regarding fixation of pay of ex-servicemen. However, subsequently by a circular dated 7.1.1993, the bank proposed to withdraw the benefit given in the earlier circular dated 7.11.1986. It is alleged in para 5 of the petition that this was in violation of Section 9A of the I.D.Act.
5.Petitioner No.1 protested against the action of the bank in issuing a circular dated 7.1.1993 alleging that it cannot withdraw the benefit given under the circular dated 7.11.1986 and asking the bank to withdraw the circular dated 7.1.1993. Since the bank did not accede to this request, petitioner No.1 raised an industrial dispute. It is alleged in para 7 of the petition that since the bank adopted an adamant attitude, the Conciliation Officer had to close the conciliation proceedings and send a conciliation failure report to the Government. However, by the impugned order dated 25.5.2000, the Central Government declined to make a reference. Hence this petition.
6.The reasons given for refusing to make the reference as mentioned in the letter dated 25.5.2000 is stated as follows:-
Fixation/refixation of pay of ex-servicemen employed by public sector bank is governed by instructions issued by the Government. The management has taken action as per the understanding arrived at between the Union and the management before the Regional Commissioner (C) on 4.4.96.
7. It is alleged in para 8 of the petition that a mere understanding is not a settlement under the Industrial Disputes Act. The name of the Union with whom there was an understanding has also not been disclosed. The impugned circular letter dated 7.1.1993 and the alleged understanding having taken place on 4.4.1996 has no bearing on the same. It is alleged that the petitioner Union was never a party to that understanding. It is alleged that conciliation proceedings had taken place on several dates but no issue regarding the alleged understanding had cropped up at any time.
8. The learned Single Judge dismissed the petition on the ground that the petitioners had committed some concealment. In our opinion, this was not a sufficient ground for dismissing the writ petition.
9. In our opinion, a mere understanding is not a settlement under the Industrial Disputes Act. The concept of settlement is well known under the Industrial Disputes Act, and a mere understanding cannot amount to a settlement as a settlement results in certain rights and liabilities.
10. It may further be mentioned that in Ram Avtar Sharma v. State of Haryana, 1985 II L.L.J 187, the Supreme Court observed that while exercising the power of making a reference under Section 10(1) of the Industrial Disputes Act, the appropriate Government performs an administrative act and not a judicial or quasi-judicial Act. Being an administrative function the appropriate Government cannot delve into the merits of the dispute and determine the lis. Under Section 10, the appropriate Government while considering whether to make a reference or not can only determine prima facie whether an industrial dispute exists or the claim is frivolous or bogus or put forth for extraneous and irrelevant reasons.
11. It may be mentioned in this connection that the Circular dated 7.11.1986 states:
Co : RM No.78/84 of 1986
CIRCULAR TO ALL REGIOINAL /ZONAL AUTHORITIES IN INDIA
Re. Fixation of pay " Ex-servicemen
We refer to our circular No.Co.:PM : No.78/78 dated 5.9.1986 on the above subject.
Vide our circular No.76/62 dated 4.8.84, we had advised that for the purpose of fixation of pay of ex-servicemen re-employed (a) protection may be given to total emoluments i.e. pay plus D.A. instead of only pay last drawn by the ex-servicemen before their retirement from agreed force, if they jointd banks before 1.9.78 and (b) the basic pay drawn in the armed force (instead of pay plus D.A.) may be protected for the purpose of pay fixation on re-employed in banks service on or after 1.9.78.
Vide their memorandum No.F.No.10/49/84-SCT(B) dated 10.586 the Govt. has now clarified as under:-
The banks may invite options from the pre 1.9.78 ex-servicemen entrants to the Bank service to exercise fresh option to come over to the post 1.9.78 pay fixation formula in which case their pay will be refixed with effect from 1.9.78 as if they were fresh entrants to the Bank service. No arrears on account of re-fixation of pay will, however, be admissible to such options.
With effect from 1.7.83, the pay fixation on re-employment of ex-servicemen in the banks would be through protection of the basic pay plus DA drawn by then at the time of their release from the armed forces. The figure of pay plus DA admissible to the Bank will be fixed with reference to this protection and the relevant stage of the basic pay in the scale will be determined after deducting DA admissible in the Banks from the figure protected.
This above orders will come into force with effect from the date of issue of this letter. However, the pay fixation of ex-servicemen re-employed in banks on or after 1.7.83 will be done in accordance with the provisions of this letter with effect from .7.83.
Vide their memorandum No.F.No.201/11/85/SCT(B) dated 25.7.86 Govt. have further clarified as under:-
In respect of such officials the pay + DA drawn by them at the time of their retirement/release from the Armed forces will be protected with pay + DA in the banks and after deducting the DA admissible in the banks from that figure, their basic pay will be fixed.
The excess amount, if any, paid to the ex-servicemen who joined between 1.7.83 to 10.6.86 on account of the retrospective effect being given to the IV Bipartite Settlement may be recovered by the bank, as it is an intended benefit.
Vide their office memorandum No.F.No.202/30/2 /84/SCT/(B) dated 24.7.86 it is clarified that classification pay and Good service/conduct pay forms part of the pre-retirement pay of ex-servicemen which have to be taken into account at the time of their fixation of pay on re-employment.
We request you to be guided accordingly.
Assistant General Manager
(HRD & Staff ADMN.)
12. The subsequent Circular dated 7.1.1993 withdrawing the benefit given by the earlier Circular dated 7.11.1986. states: Bank of Baroda
H.O. Mandvi Baroda
Staff Admn. Dept.
Sayaji Ganj, Baroda-390005
CO.RM: CIR: No.85/01
CIRCULAR TO ALL REGIONAL/ZONAL AUTHORITIES
Re. : Salary fixationof ex-servicemen
Re-employed in Banks " Treatment of Special allowance.
Reference is request to our circular dated No.CO.R: 82/140 datd 1.10.90 and subsequent clarification given vide our circular NO.CO.BR:83/131 dated 17.9.91 in respect of Govt. guide lines issued regarding pay fixation of ex-servicemen on their re-employment in public sector banks.
In this connection Indian Banks Association vide their letter No.PD/CIR/76/589/2345 dated 13.3.92 has issued following clarification regarding treatment of special allowance while arriving at pay fixation of Ex-servicemen re-employed in Banks.
In terms of existing instructions, pay fixation of ex-servicemen appointed in banks is done on the basis of protection of pay plus dearness allowance drawn by them at the time of their release from Armed Forces. The basic pay fixed in the banks plus dearness allowance thereon should be the same or slightly higher than the amount of protected pay.
The Govt. of India, Ministry of Finance (Banking Division) desired that it be clarified to all the bank that it would be necessary to ensure that the basic pay plus dearness allowance, the Special allowance for Armed Guards/Watchmen are taken into account while protecting the last drawn basic pay and dearness allowance thereon at the time of retirement/discharge from the service of armed forces as the special allowance is in the nature of Basic pay.
The protection as above (i.e. with special allowance component) would also be relevant if the ex-servicemen are recruited as stenographers or at some other allowance carrying position in clerical/subordinate grades.
We, therefore, request you to be guided by the above. Further, we also request you to reopen the past cases, where the ex-servicemen are recruited at special allowance carrying posts, and arrange for re-fixation of their basic pay in terms of the above guidelines and recovery, if any, may be made wherever applicable.
Kindly confirm, receipt of the above circular to Chief Manager (Staff Admn.), Head Office, Baroda.
Asstt. General Manager(Personnel)
13. Thus the Circular dated 7.1.1993 prima facie appears to effect a change in the conditions of service in order to serve a category of employees of the bank and hence prima facie it seems that Section 9A of the Industrial Disputes Act is violated.
14. However, the learned counsel for bank submits that the order dated 4.4.1996 (which is at page 99 of the paper book) in this appeal amounts to a settlement under Section 12(3) of the Industrial Disputes Act, though called an understanding.
15. The order of 4.4.1996 states:
Shri R.N.Bharti, Chief Manager (P) and Shri A.Shankar Narayan, Manager(P) for management
Shri R.L.Virmani, Genl.Secy. for Union.
In continuation to the proceedings held on 13.2.96, further discussions is held in the dispute today. At the outset the Genl.Secy. of the union stated that without giving a notice under Section 9A, the management has affected the change in wage in respect of Sh.Jaipal Singh, Sh.Mahender Singh, Sh.Satpal Singh and Sh.Dharam Singh armed guard of Bank of Baroda posted at Delhi during the year 1993-94 on different dates. The Union demanded that before giving any affect of such change the bank which is an industry and covered under Section 9A needs to give a statutory notice of 21 days which has not been done in these cases. The Genl. Secy. Further stated that there are few more employees who have also been affected by such change.
The Chief Manager (P) stated that the pay fixation of the armed guard was made prospectively only in respect of those armed guard who joined the bank on or after 13.3.92 and excess payment where-ever was made the orders were issued for recovery in terms of the guidelines. In another cases where the re-fixation was made for the armed guard who joined the bank prior to 13.3.92, their basic were also re-fixed in terms of the guidelines. However, the excess payment made in their cases was not recovered.
The main issue raised by the Union is that while affecting the change in wage structure by way of re-fixation which is in fact to the lower side needed to have notice under Section 9A of the I.D.Act, 1947. Item I of Ivth schedule state that condition of service for change a notice is to require under Section 9A includes wages including period and mode of payment. The RLC has suggested and both the parties have accepted that the management will comply with the provisions of Section 9A and restore the old wage structure from the date of issue of notice of change and thereafter affect the change for which the union will not raise any further dispute in conciliation.
In view of the above understanding the dispute is closed.
RLC (C) New Delhi.
16. A perusal of order dated 4.4.1996 shows that the RLC has suggested, and both parties had accepted, that the management will comply with the provisions of Section 9A and restore the old wage structure from the date of issue of notice of change and thereafter affect the change for which the Union will not raise any dispute in conciliation.
17. In our opinion, the order dated 25.5.2000 of the Central Government declining to make a reference was unjustified and illegal because the order dated 4.4.96, whether it is called an understanding or a settlement, does not dispose of the dispute. All that it says is that the parties have agreed that the management will restore the old wage structure from the date of issue of notice of change and thereafter effect the change for which the Union will not raise any dispute in conciliation. It does not say that the Union will not raise any dispute in adjudication. There is a well settled difference between conciliation and adjudication. Hence, in our opinion, a reference under Section 10(1) is not barred because a reference is made to the Labour Court or Tribunal for adjudication of the dispute.
18. Also, even if the management gives a notice of change under Section 9A the workers can always raise a dispute that the said notice was not valid or justified, and if they do so that dispute should be referred for adjudication to the Labour Court or Tribunal.
18. A bank is certainly an industry under the Industrial Disputes Act. Hence it has to comply with the provisions of Section 9A of the ID Act which is mandatory. It is alleged by the writ petitioner that no notice of change under Section 9 was ever given.
19. It is alleged by the Union that when the Circular dated 7.1.1993 was issued withdrawing the benefits given by the Circular dated 7.11.1985, the Union took up the matter and held several meetings with the management, but the issue could not be resolved amicably. The Union was then constrained to approach the Conciliation Officer to sort out the dispute. The Conciliation Officer tried his best to resolve the dispute and advised the management to cancel the unilateral change and to effect the change after complying with Section 9A of I.D.Act. Both the parties agreed to this suggestion. The bank agreed to restore the old wage structure and then serve a notice of change in compliance with the provisions of Section 9A of I.D.Act. However, it is alleged in para 3 of the Rejoinder Affidavit to the writ petition that even after the advice given by the RLC the management neither restored the old pay structure prevailing prior to October 1993 nor paid the arrears which accrued nor issued any notice of change as provided under Section 9A of I.D.Act. A letter dated 12.4.1996 issued to petitioner No.3 shows that the respondent No.1 bank purported to restore the old wage structure only for the month of April, 1996. It is alleged in para 4 of the Rejoinder Affidavit that the bank is not acting according to its undertaking given on 4.4.1996. But for this undertaking given by the management, the Conciliation Officer would have submitted a failure report and the matter would have been referred by the Government for adjudication of the dispute by the Industrial Tribunal. It is alleged that the bank misled the authorities as well as the workmen and gave a false impression that they admitted their default in not following Section 9A of the I.D. Act. This happened in 1996. Now five years later, they are taking up a totally contrary stance.
20. The Union was then constrained to approach the Conciliation Officer again vide a complaint letter dated 16.9.1998 (Ann.R-10). A reply to this letter was submitted by the respondent No.1 Bank to R.L.C. which is Annexure R-11. This reply also shows that the old pay scale was not restored. It is alleged that there is no valid reason for this refusal to refer the dispute for adjudication.
21. In Dhanbad Colliery Karamachari Sangh v. Union of India and Ors. 1991 Supp.(2) SCC 10 the Supreme Court observed that the Central Government cannot itself decide the dispute and has to refer the dispute to the appropriate Industrial Court for adjudication under Section 10 of the Industrial Disputes Act. In that judgment the Supreme Court directed the Government to refer the dispute to the appropriate Industrial Court for adjudication within three months. It is well settled that the Government cannot go into the merits of the dispute in deciding whether to make a reference or not. As long as a dispute genuinely exists or is apprehended, a reference should be made. In our opinion, in the present case the Government by its order dated 25.5.2000 has in effect stated that it is not referring the dispute because the matter has been settled between the parties on 4.4.1996. We have already observed that from the order dated 4.4.1996 it is evident that nothing had been settled, and all that was agreed was that the bank had decided to restore the old pay structure and then issued a notice of change under Section 9A. According to the Union, even that was not done by the bank. At any event it is always open to the workmen to challenge the notice of change and such a challenge has to be decided by the Labour Court or Tribunal in a reference and not by the Government.
22. The function of the Government is an administrative function and it cannot go into the merits of the dispute vide Western India Match Co. v. Western India Match Co. Workers Union (1970) II LLJ 256 SC; Telco Convoy Drivers Mazdoor Sangh v. State of Bihar, ; M. P. Irrigation Karamchari Sangh v. State of M. P., etc.
23. Thus it is settled by a series of decisions of the Supreme Court that the government cannot refuse to make a reference by going into the merits of the dispute.
24. For the reasons given above, we set aside the judgment of learned Single Judge. The appeal is allowed.
25. Ordinarily, it is for the Government to decide whether to make a reference or not. Hence in the normal circumstances we would have sent the matter back to the Government to reconsider whether to make a reference or not. However, since there has been considerable delay in the matter, we direct the Government to make a reference under Section 10(1) within two months from today.