M.N. Rao, C.J.
1. The petitioner, a private limited company engaged in the manufacture of terpene chemicals at Kala Amb, Nahan in District Sirmaur of Himachal Pradesh, has filed this writ petition challenging the legality of the award passed by the Presiding Officer, Labour Court, Himachal Pradesh, Shimla in Ref. Case No. 158/1990 dated July 3, 1992.
2. There are 44 workmen of different categories skilled, semi-skilled and unskilled employed by the petitioner company which was established in the year 1972. In the year 1985, a demand was made by the workers for revision of pay scales and after discussion between the representatives of the workers and the Management, a settlement was arrived at on May 20,1986. The memorandum of settlement inter alia,specifies the monthly wages in respect of employees of different grades A, B and C. and thebenefits the workmen are entitled to Paragraph9 of the memorandum says that the settlementwill remain in force for a period of four yearsw.e.f. November 1, 1985. The workers agreed byparagraph 7, that during the tenure of the settlement they shall not raise any demand. By October 31, 1989 the settlement came to an end. OnJanuary 25, 1990 a charter of demands wasplaced by the workers before the Managementseeking revision of pay scales and certain otherbenefits. The conciliation proceedings weretaken up but as the same ended in failure, a reference under Section 12(5) of the Industrial Disputes Act, 1947 (For short the Act) was made tothe Labour Court by the State Government andthe same is in the following terms:
'Whether the demands raised by the Himachal Terpene Products Workers' Union, Kala Amb, vide demand charter dated January 25, 1990 are justified and in order? If yes, what relief and amount of compensation, the workmen are entitled to ?'
3. The petitioner company pleaded before the Labour Court that the Union is bound by the settlement dated November 1, 1985 and without complying with the mandatory requirement of two months' notice period as contemplated under Section 19(2) of the Act, no fresh demand could be raised. The company was incurring losses and, therefore, its financial position could not justify the revision of pay scales demanded by the workers union.
4. Shri Dhyan Singh, General Secretary of the workers union gave evidence as PW-1 and on the side of the Management Shri A.R. Soni figured as RW-1. The learned Judge having regard to the Statement of PW-1 General Secretary of the workers union that as a package deal if Rs. 100/-was given to each worker for a period of one year they would be satisfied, expressed the view that the same was fully justified. On the legal question of non compliance of Section 19(2) of the Act, the learned Judge held that 'the agreement would be deemed to have been terminated after two months notice expiry of the demand notice which is a reasonable interpretation' and accordingly rejected the contention of the petitioner company.
5. In this writ petition, in support of the plea that the award is unsustainable in law, it was argued by Shri Ramakant Sharma, learned counsel for the petitioners that the non-compliance of Section 19(2) of the Act is fatal to the reference itself and, therefore, the consequential-award must also fail. The failure on me part of the learned Judge to consider the financial position of the company before granting the relief of enhancement of Rs. 100/- in the wages of each of the employees is a vitiating factor.
6. Controverting these submissions, it was argued by the learned Advocate General appearing for the State of Himachal Pradesh that the order of reference is not afflicted with any legal infirmity inasmuch as the notice was already served by the workers' union as far back as on December 16, 1989 informing the Management that after the expiry of the period of four years on October 31, 1989, the settlement became infructuous. Shri A.K. Gupta, learned counsel appearing for the third respondent workers' union has urged that the workers' union in order to purchase peace and safeguard the financial interests of the company has settled for a meagre relief of enhancement of Rs. 100/- in the monthly wage of every employee and, therefore, the award passed by the Labour Court cannot be interfered with by this Court.
7. We shall first take up the contention concerning the legality of the order of reference on the alleged ground of violation of the mandatory requirement of Section 19(2) of the Act. Section 19 deals with the period of operation of settlements and awards. Sub-section (1) says that a settlement comes into operation on the date agreed upon by the parties to the dispute, and if no date is agreed upon, it shall come into force on the date on which the memorandum of settlement is signed by the parties. Sub- section (2), which is relevant reads:
'(2) Such settlement shall be binding for such period as is agreed upon by the parties, and if no such period is agreed upon, for the period of six months (from the date on which the memorandum of settlement is signed by the parties to the disputes), and shall continue to be binding on the parties after the expiry of the period aforesaid, until the expiry of two months from the date on which a notice in writing of an intention to terminate the settlement is given by one of the parties to the other party or parties to the settlement.'
8. The above sub-section lays down that the settlement binds the parties for the period agreed upon and if no period is agreed upon it shall be in force for a period of six months from the date on which the memorandum of settlement is signed and that the agreement continues to bind the parties even after the expiry of the period specified in the agreement or in the absence of such specification for a period of six months and shall come to an end only after the expiry of two months from the date on which a notice in writing is given by one of the parties to the other expressing the intention to terminate the settlement.
9. The contention of the learned Counsel for the petitioners is that no formal notice was given by the workers' union terminating the settlement. But if the date on which the dispute was raised, namely January 21, 1990 if treated as a notice the two months period reckoning from the date having expired only on March 24, 1990, any order of reference concerning the industrial disputes in question ought to have been only subsequent to March 24, 1990 but as the reference in question was made on March 23, 1990 the same must be set aside. In support of the argument that Sub-section (2) is mandatory, the learned counsel has cited two precedents:
(i) (1968-I-LLJ-555) (SC) B.W.C.& S. Mills Co. Ltd v. Workmen and Anr.
(ii) (1962-I-LLJ-661) (SC) Workmen of Western India Match Co. Ltd. v. Western India Match Co. Ltd.
10. The principle of law relied upon by the learned counsel supported by the precedents is unexceptional but the contention in this regard is based on a factually incorrect assumption, namely, that the notice of termination of the earlier settlement emanated from the workers' union only on January 21, 1990 when they raised the dispute. Sh. Dhyan Singh, General Secretary of the Workers' union in his evidence as PW-1 before the Labour Court had stated that the workers' union had given notice terminating the settlement. The file produced before us by the learned Advocate General contains the letter addressed by the workers' union on December 16, 1989 to the Labour Inspector. Sirmaru district, Nahan, marking a copy to the Manager of the petitioner company 'for information and necessary action', and it clearly states 'that the agreement has expired on October 31, 1989 and thus become meaningless. Therefore, the said agreement shall be treated as infructuous w.e.f. October 31, 1989'. The learned counsel for the petitioners after seeing the aforesaid letter in the file produced by the learned Advocate General, could not dispute the factual position. As the notice of termination was issued by the workers' union on December 16, 1989 and the reference to the Labour Court was made by the State Government on March 23, 1990, after the expiry of the mandatory requirement of two months period, we have no hesitation in rejecting the contention that Section 19(2) was violated when the reference was made by the State Government.
11. The charter of demands dated January 25, 1990 served by the workers' union upon the petitioner company, apart from seeking revision of pay scales in respect of all the three grades of workers, also covers payment of dearness allowance at the rate of 20 per cent annually over the basic pay, appointment of six workers on permanent basis as per the requirement under Section 3-B of the Standing Orders, enhancement of tea allowance from Rs. 25/- to Rs. 35/- per month, enhancement of washing allowance from Rs. 10/- to Rs. 20/- per month, uniform rate of house rent allowance and supply of hunting shoes to workers in the electricity wing. Evidently, there was some understanding between the workers' union and the Management because of the difficult financial position the company was facing and this is the inference we draw from the evidence of PW-1, the General Secretary of the workers' union, who stated: 'We would be satisfied if Rs. 100/- is given to each worker as package deal on the last wages drawn by us for one year in view of the cost of living and the financial constraints on the economy of the respondent (company) as stated by the AR (RW-l) (Manager of the company) of the respondent'. The union was therefore satisfied as a package deal if there was monthly increase of Rs. 100/- in the wages of all the employees, a very realistic altitude. Had there been a detailed inquiry into the demands made by the workers, there was every possibility of their getting much more than Rs. 100/- increase in the wages. What was granted to them was less than even one third of what was covered by the charter of demands dated January 25, 1990. The learned Judge after taking note of the factors that should be taken into consideration in the fixation of minimum wage as decided by the Supreme Court of India Standard Vacuum case (1961-I-LLJ-227) and reiterated in the Workmen v. The Management of Reptakos Brett Co. Ltd. and Anr. (1992-I-LLJ-340) very rightly observed.
'......The demands of the petitioners for Rs. 100/- per month to each worker as a package deal is not highly unreasonable or arbitrary as compared to their demand for revision of pay scales.'
12. The relief granted by the Labour Court in this case cannot be faulted on the ground that it travelled beyond the terms of reference. Limiting the relief to an extent far less than what was claimed does not amount to making a demand for an inquiry into matters not covered by the terms of reference much less can it be said that the Labour Court has exceeded its jurisdiction in granting the relief it did. The alleged financial constraints of the petitioner company cannot constitute a legally sustainable contention for denying the workers the meagre relief sought by them and granted by the Labour Court.
13. For these reasons sustaining the legality of the reference made by the State Government and the consequential award passed by the Labour Court, we dismiss the writ petition. No costs.