THE MANAGING DIRECTOR v. THE SECRETARY

The petitioner is the employer and respondents 1 to 3 are Unionsof employees of the petitioner. The 1st and 2nd respondents Unions filedtwo applications before the 4th respondent-certifying officer, under Section 10 of the Act, for modification of clause 48 of Ext.P1 StandingOrders applicable to the employees of the petitioner, by increasing theage of retirement from 55 years to 58 years and also for addition of aclause regarding prevention of sexual harassment of womenemployees, which was allowed by the 4th respondent by Ext.P10 order. The petitioner's appeal against the raising of the retirement age in Ext.P10 order was rejected by the 5th respondent appellate authorityunder the Act, by Ext.P14 order. The petitioner-employer ischallenging Exts.P10 and P14 orders in this writ petition. The factsnecessary for disposal of this writ petition may be summarised asunder. 2. The petitioner's company has units all over India.

Theservice conditions of the employees of these units are governed bystanding orders certified under the Act. Ext.P1 is the certified standing w.p.c.24729/06 2orders applicable to the employees of the unit at Palakkad, modification of clause 48 of which is the subject matter of this writpetition. The Standing Orders of three other units of the petitioner at Bangalore are Exts.P2, P3 and P4. In all these Standing Orders theretirement age of the employees is fixed as 55 years. InAugust/September 2003, by Exts.P5 and P6, respondents 1 and 2 filedapplications for two modifications in the Standing Orders applicable tothe Palakkad unit to enhance the retirement age of the employeesfrom 55 years to 58 years and to introduce a clause relating toprevention of sexual harassment of women employees. The reasonsfor seeking the modifications given in Ext.P5 were that the StandingOrders were drafted without considering the situations prevalent, theclaims of the workers and without discussions with the Unions'representatives only to benefit the management.

They demanded thatthe same should be modified commensurate with the changed times tobenefit the employees also. In Ext.P6, no specific reasons werementioned. The petitioner opposed the modification regardingretirement age on the following grounds: (a)The existing retirement age was fixed taking into accountthe nature of the work performed by the workers; (b)Being an industry engaged in the manufacture of precisionelectronic instruments, the work of the establishment called for a high w.p.c.24729/06 3degree of skill and dexterity. (c)The job requirements are good eye sight, nimbleness offingers, good memory and speed. Therese qualities would diminish byage affecting the efficiency of the employees and therefore furtherenhancement of age of retirement of the employees would adverselyaffect the quality and out put of the products manufactured by thepetitioner. (d)The financial position of the company is very weak, whichdoes not permit the company to shoulder any additional financialburden which would result in enhancement of the age of retirement.

The company is progressively incurring heavy losses which hasmounted to Rs.273 crores in 2005-06.(e)The unions had raised a demand for enhancement of theretirement age in their charter of demands which contained severalother demands also. In respect of those demands Exts.P7, P8 and P9memoranda of settlement were entered into wherein it has beenspecifically provided that all issues not expressly settled therein shallbe treated as withdrawn, with a further clause that the unions will notraise any demands during the period of validity of the settlement whichinvolved additional financial commitment to the petitioner. Before the 4th respondent the unions supported their claims on thefollowing grounds: w.p.c.24729/06 4(a)In almost all industrial units in Palakkad District, theretirement age of workmen is 58 years. In similar electronicmanufacturing units like ITI Palakkad and OEN company, Ernakulam, the retirement age is 58 years.

(b)The model Standing Orders prescribed under the Kerala(Industrial Employment) Standing Orders Rules (hereinafter referredto as the Rules), the retirement age is fixed as 58 years. (c)As per the employees Pension Scheme under the Employees Provident Funds and Miscellaneous Provisions Act, anemployee would become entitled to pension only after completion of58 years. Therefore, if the employees are retired at 55 years theywould be left with no means of sustenance for 3 years. (d)The management themselves are allowing some employeesto continue upto 58 years for which discretion is vested in themanagement as per the existing Standing Orders themselves. Accepting the demand of the unions and rejecting the contentions ofthe management the 4th respondent directed modification of the Standing Orders as requested by the unions by Ext.P10 order, on theground that the retirement age of 55 years is not in conformity withthe Model Standing Orders in the Schedule to the Rules and if theretirement age is 55 years the employees would have to wait for 3years to become eligible for pension under the Employees' Pension w.p.c.24729/06 5Scheme.

The management challenged Ext.P10 order in Ext.P11 appealbefore the 5th respondent. In the appeal, in addition to raising theobjections raised before the Certifying Officer, the petitioner alsopointed out that a similar demand was raised by the workers of the Bangalore unit of the company, which, although originally allowed bythe certifying officer, the Appellate Authority, namely the IndustrialTribunal, Bangalore, set aside the order restoring the retirement ageas 55 years. According to the petitioner, since the employees aretransferable from one unit to another, if retirement age is different intwo units, it would lead to anomalous results when employees aretransferred from one unit to another. However, the appeal did not findfavour with the 5th respondent who dismissed the same, by Ext.P14order, relying on the Model Standing Orders and the retirement age insimilar industries, the Central Government Service and in services insome other States in India. That led to this writ petition challengingExts.P10 and P14 orders.3.I have considered the rival contentions of the parties withreference to the case law cited before me.

This required the process of comparison of the Draft Standing Orders withthe Model Standing Orders and on comparison, if it was found that the Draft Standing Orders were in conformity with the Model StandingOrders, the same would be certified even if they were not reasonable orfair. The workmen practically had no say in the matter and they wouldnot be listened even if they agitated that the Draft Standing Orders werenot fair or reasonable. 36. In 1956, radical changes were introduced in the Act by Parliament as a result of which not only the scope of the Act waswidened, but jurisdiction was also conferred upon the Certifying Officeras also the appellate authority to adjudicate upon and decide thequestion relating to fairness or reasonableness of any provision of the Standing Orders. 37. In the instant case, the Standing Orders as finally certifiedcannot be said either to be not in consonance with the Model StandingOrders or unreasonable or unfair.

38. The Model Standing Orders, no doubt, provided that adelinquent employee could be represented in the disciplinary proceedingsthrough another employee who may not be the employee of the parentestablishment to which the delinquent belongs and may be an employeeelsewhere, though he may be a member of the trade union, but this ruleof representation has not been disturbed by the Certified Standing Order, inasmuch as it still provides that the delinquent employee can berepresented in the disciplinary proceedings through an employee. Theonly embargo is that the representative should be an employee of theparent establishment. The choice of the delinquent in selecting hisrepresentative is affected only to the extent that the representative hasto be a co-employee of the same establishment in which the delinquent is w.p.c.24729/06 7employed. There appears to be some logic behind this as a co-employeewould be fully aware of the conditions prevailing in the parentestablishment, its Service Rules, including the Standing Orders, andwould be in a better position, that an outsider, to assist the delinquent inthe domestic proceedings for a fair and early disposal.

The basic featuresof the Model Standing Orders are thus retained and the right ofrepresentation in the disciplinary proceedings through another employeeis not altered, affected or taken away. The Standing Orders conform to allstandards of reasonableness and fairness and, therefore, the appellateauthority was fully justified in certifying the Draft Standing Orders assubmitted by the appellant.”(underlining supplied)Model Standing Orders only lay down the basic features which shouldbe contained in a certified Standing Orders. It is not necessary thatevery minute details of the service conditions in the Model StandingOrders should be incorporated in the Standing Orders before the samecan be certified. In fact service conditions of employees differ from State to State, industry to industry and employees to employeesdepending upon very many factors such as the nature of the industry, the nature of the work assigned to the employees, the workingconditions available in that part of the country where the industry issituated, and the like.

The scheme of the Act makes it abundantly clearthat the employer and the workers can have agreed service conditionsin the Standing Orders also provided the same are not against theprovisions of the Act, as is clear from sub section (2) of Section 10,which provides that where modifications are proposed by agreementbetween the employer and workmen, a certified copy of the agreementshall be filed with application for modification. What the certifying w.p.c.24729/06 8officer is to ascertain is whether the Standing Orders conform to allstandards of reasonableness and fairness. As the nomenclature itselfsuggests, Model Standing Orders constitute only a model frame workgiving the basic features. In the Standing Orders to be certified themanagement can include all fair and reasonable service conditions, subject, of course, to the provisions of the Act, the certifiability ofwhich has to be decided by the Certifying Officer based on establishedprinciples. Even if the clauses included do not conform to the ModelStanding Orders, if the same are fair and reasonable and are notopposed to the provisions of the Act, the same can be certified.

The only limitations to thepower are the reasonableness or fairness which of course must beestablished and the expiry of six months after the date of the standingorders or their last modifications coming into operation. In the absence ofany such express restriction we should then ask ourselves whether thereis in any of these sections anything which would indicate such arestriction by necessary implication. In that connection the only wordwhich can point to such a restriction, according to counsel, is the word'final' In Sec. 6 so that the contention reduces itself to this that bymaking the order of the appellate authority final under Section 6,Parliament intended by necessary implication that the bar of finality canonly be removed if new circumstances arise which necessitate or justifymodification.xxxxxxxxxxxx7. The Act was passed because the legislature thought that inmany industrial establishments the conditions of service were not uniformand sometimes were not even reduced to writing.

This led to conflictsresulting in unnecessary industrial disputes. The object of passing the Actwas thus to require employers to define with certainty the conditions ofservice in their establishments and to require them to reduce them towriting and to get them compulsorily certified. The matters in respect ofwhich the conditions of employment had to be certified were specified inthe schedule to the Act. As the Act stood prior to its amendment in 1956,Section 3 required the employer to submit to the certifying officer draftstanding orders proposed by him for adoption in his establishment. Section 4 provided that standing orders shall be certifiable if (a) provisionis made therein for every matter set out in the Schedule, and (b) thatthey were otherwise in conformity with the provisions of the Act. Thesection, however, expressly provided that it shall not be the function ofthe certifying officer or the appellate authority to adjudicate upon thefairness or reasonableness of the standing orders.

Under Section 5, thecertifying officer was required to send a copy of the draft standing ordersto the union, if any, or in its absence to the workmen in the mannerprescribed together with a notice calling for objections by them, if any, and to give opportunity to the employer and the workmen of being beardand then to decide whether or not any modification of or addition to thedraft standing orders was necessary to render them certifiable under the Act. Section 6 provided for an appeal by any person aggrieved by theorder passed under S. 5. The appellate authority, whose decision wasmade final, had the power to confirm or amend or add to the standingorders passed by the certifying officer to render them certifiable underthe Act. Though the order passed by the appellate authority was made w.p.c.24729/06 11final under Section 6, Section 10 provided for modification. Sub-section(1) of Section 10 provided that standing orders finally certified under this Act shall not, except on agreement between the employer and theworkmen, be liable to modification until expiry of six months from thedate on which they or the last modification thereof came into operation.

Sub-section (2) read as follows: "An employer desiring to modify his standing orders shall apply tothe Certifying Officer in that behalf............" Sub-section (3) providedthat the foregoing provisions of the Act shall apply in respect of anapplication under subsection (2) as they apply to the certification of thefirst standing orders.

There is nothing in the Industrial Disputes Act restricting the rightto raise such a dispute only when a new set of circumstances has arisen. If that right is unrestricted, can it be possible that the very legislaturewhich passed both the Acts could have, while conferring the right on theworkmen individually, restricted that right as suggested by counsel? Toillustrate, a new industrial establishment is set up and workmen areengaged therein. Either there is no union or if there is one it is not yetproperly organised. The standing orders of the establishment are certifiedunder the Act. At the time of certification, the union or the workmen'srepresentatives had raised either no objections or only certain objections. If subsequently the workmen feel that further objections could have beenraised and if so raised the authority under the Act would have taken theminto consideration, does it mean that because new circumstances havesince then not arisen, the workmen would be barred from applying formodification?

Let us take another illustration. Where, after the standingorders or their modifications are certified, it strikes a workman after theyhave been in operation for some time that a further improvement in hisconditions of service is desirable, would he be debarred from applying forfurther modification on the ground that no change of circumstances in themeantime has taken place? Where the standing orders provide 10festival holidays, if counsel were right, the workmen can never apply foran addition in their number as they would be faced with the contentionthat the festivals existed at the time of the last certification and there wastherefore no change of circumstances.

An application for reviewwould be made in the proceedings in which the judgment or order soughtto be reviewed is passed. That would not be so in the case of anapplication under Section 10 (2). Such an application is independent ofthe proceedings in which the last certifying order was passed and ismade in the exercise of an independent right conferred upon theapplicant by Section 10 (2). In an application for modification, the issuebefore the authority would be not as to the reasonableness or fairness ofthe standing orders or their last modification, but whether themodification now applied for is fair and reasonable. Therefore, thecontention that a change of circumstances is a condition precedent to themaintainability of an application under Section 10 (2) or that anapplication for modification without proof of such a change amounts toreview by the same authority of its previous order is not correct.'(underlining supplied)Going by that decision, under section 10, what the Certifying Officer isto consider is whether the modification applied for is fair andreasonable.

Further, the parties, being human, cannot always foreseethe effects of a standing order in practice. If after the certifiedStanding Orders are brought into force and the same after sometime, w.p.c.24729/06 15are found to work out to the prejudice of either party, it is only fairand reasonable that they should be given an opportunity to seekmodification of the same before the Certifying Officer. Such right ofmodification is also not one sided. That right is available to bothemployer and the employees. In fact apart from change ofcircumstances, one can envisage several other similar reasons alsowhich supports a case for modification. Therefore, for seekingmodification it is not a necessary condition that there should havebeen change of circumstances warranting such modification, if themodification sought for is fair and reasonable. Either party can seek amodification before the Certifying Officer, the only condition for thesame being that the modification requested for should be fair andreasonable.

7. Like other conditions of service in a standing order, reasonableness and fairness of retirement age depends on manyfactors such as; (a)what is the nature of the work of the employees in theestablishment ?(b)what is the nature of the wage structure paid to them?(c)What are the retirement and other amenities available tothem?(d)What are the climatic conditions of the region where the w.p.c.24729/06 16employees work?(e)What is the age of superannuation fixed in comparableindustries in the same region?(f)What is the general practice prevailing in the industry inthe past in the matter of retiring its employees ? (see Jeewanlal 1929 Ltd. v. Workmen, AIR 1972 SC 1210). Except referring to the retirement age of workmen in two otherestablishments in the region, neither the certifying officer nor theappellate authority has undertaken the requisite exercise ofconsidering these parameters while passing the impugned orders.

Insuch circumstances, normally I should direct reinvestigation by thecertifying officer after inspecting the conditions in the petitioner'sfactory to come to a conclusion whether the age of superannuationshould be left at 55 or whether it should be raised to 58 years. But twoother circumstances would deter me from adopting that course. 8. The first is the fact that in respect of the Bangalore unit ofthe petitioner company, identical question was considered by theappellate authority under the Act, namely the Industrial Tribunal, Bangalore and by Ext.P12 order, the appellate authority held that inview of the precarious financial condition of the company, upwardrevision of the retirement age would put the company into financialliability and therefore, the certifying officer was in error in allowing the w.p.c.24729/06 17modification of the Standing Order in respect of retirement age byraising the same from 55 years to 58 years.

As a consequence of thetwo orders, now the retirement age of employees of the two units aredifferent. Clause 31 of Ext.P1 certified standing order of theestablishment provides thus;

31. Workmen shall be liable to be transferred from onedepartment to another department or from one job to another accordingto the discretion of the Company. Workmen are also liable to betransferred from the Factory at Palghat to any other establishment or the Company inside or outside the State of Kerala, whether suchestablishment is in existence at the time of the engagement of thetransferred workmen or not.

(underlining supplied)This shows that employees of the Palakkad unit are transferable to the Bangalore Unit. If the retirement age of the employees of the two unitsare different, it would cause anomalous results in case of transfer of anemployee from the Palakkad unit to the Bangalore unit. 9. The second is a more clinching one in favour of thepetitioner.

In fact the same is also relied upon in Ext.P12. Admittedlythe unions had in their charters of demands, which resulted in Exts.P7,P8 and P9 memoranda of settlement, raised the issue of upwardrevision of retirement age to 58 years. The memoranda of settlementdo not as such contain any reference to the said demand. But clauses13, 14, 15 and 16 of Ext.P7 state thus: “13. All other terms and conditions which are not specifically altered orvaried by this settlement shall continue to be in force between theparties. w.p.c.24729/06 1814. This settlement will be full and final settlement of all issues raisedin the Charter of Demands. 15. Union and the workmen agree that they shall not during the periodof this settlement, either individually or collectively or through theirunion make any demand or raise dispute involving or resultingeither directly or indirectly any financial liability to the Company. 16.

Union and workmen agree that they shall not during the period ofthis settlement resort to any strike, go-slow or intimidation.” Clauses 15, 16 and 17 of Ext.P8 state thus:

15. All other service conditions or benefits which are not specificallyaltered and varied by this settlement shall continue to remain inforce. 16. The Unions and workmen agree that this settlement sets at rest alldemands raised in the charter of demands or during discussions, but not specifically referred to in this settlement, such demandsshall be treated as having been dropped/not pressed and settledaccordingly. 17. Unions and the workman agree that they shall not during theperiod of this settlement, either individually or collectively orthrough their union make any demand or raise dispute involving orresulting either directly or indirectly any financial liability to the Company.

Again in Ext.P9 also similar clauses have been incorporated as clauses15, 17 and 18 thus; “15.

All other service conditions or benefits which are not specificallyaltered or varied by this settlement shall continue to remain inforce.xxxxxxxxxxxx17.The Unions and workmen agree that this settlement sets at rest alldemands raised in the charter of demands or during discussion, but not specifically referred to in this settlement, such demandsshall be treated as having been dropped/not pressed and settledaccordingly. 18. Unions and the workmen agree that they shall not during theperiod of this settlement, either individually or collectively orthrough their union make any demand or raise dispute involving or w.p.c.24729/06 19resulting either directly or indirectly any financial liability to the Company.” The Supreme Court had occasion to consider the effect of similarclauses in a conciliation settlement on the demand for modification ofthe standing order by upward revision of the retirement age, in Barauni Refinery Pragatisheel Shramik Parishad v.

India OilCorporation Ltd. (1991) 1 SCC 4. In fact, in that decision also therewas a general settlement between the management and the unionswhich contained the following clauses:

19. The Corporation agrees that such terms and conditions orservice as well as amenities and allowances as are not changedunder this settlement shall remain unchanged and operative duringthe period of the settlement.xxxxxxxxxxxx21.The Unions agree that during the period of operation of thissettlement, they shall not raise any demand having financialburden on the Corporation other than bonus provided that thisclause shall not affect the rights and obligations of the parties inregard to matters covered under Section 9-A of the IndustrialDisputes Act, 1947.

In that case also the certifying officer allowed the modification. TheAppellate Authority affirmed the revision with a slight modification. Theemployer challenged the same before the High Court, which challengefound favour with the High Court, who set aside the modification.

Affirming the judgment of the High Court relying on clauses 19 and 21of the memorandum of settlement, the Supreme Court held thus inparagraphs 9 and 10: w.p.c.24729/06 20“9. The settlement does not make any specific mention aboutthe age of retirement. Clause 19 of the settlement, however, providesthat such terms and conditions of service as are not changed under thissettlement shall remain unchanged and operative for the period of thesettlement. The age of retirement prescribed by clause 20 of the certifiedStanding Orders was undoubtedly a condition of service which was keptintact by clause 19 of the settlement. The provisions of the StandingOrders Act to which we have adverted earlier clearly show that thepurpose of the certified Standing Orders is to define with sufficientprecision the conditions of employment of workman and to acquaint themwith the same. The charter of demands contained several matterstouching the conditions of service including the one concerning theupward revision of the age of retirement.

After deliberation certainconditions were altered while in respect of others no change wasconsidered necessary. In the case of the latter clause 19 was introducedmaking it clear that the conditions of service which have not beenchanged shall remain unchanged, i.e. they will continue as they are. Thatmeans that the demand in respect of revision of the age of retirementwas not acceded to. 10. By clause 21 of the settlement extracted earlier the Unionagreed that during the period of the operation of the settlement theyshall not raise any demand which would through an additional financialburden on the management, other than bonus. Of course the proviso tothat clause exempted matters covered under Section 9-A of the IndustrialDisputes Act from the application of the said clause. However, Section 9-A is not attracted in the present case. The High Court was, therefore, right in observing: “when the settlement had been arrived at between theworkmen and the company and which is still in force, the parties are toremain bound by the terms of the said settlement.

It is only after thesettlement is terminated that the parties can raise any dispute for freshadjudication.” The argument that the upward revision of the age ofsuperannuation will not entail any financial burden cannot be accepted. The High Court rightly points out: “workmen who remain in service for alonger period have to be paid a large amount by way of salary, bonus andgratuity than workmen who may newly join in place of retiring men”. TheHigh Court was, therefore, right in concluding that the upward revision ofthe age of superannuation would through an additional financial burdenon the management in violation of clause 21 of the settlement. Therefore, during the operation of the settlement it was not open to the workmen todemand a change in clause 20 of the certified Standing Orders becauseany upward revision of the age of superannuation would come in conflictwith clauses 19 and 21 of the settlement.

We are, therefore, of theopinion that the conclusion reached by the High Court is unassailable.” The clauses quoted above from Exts.P7, P8 and P9 settlementsbetween the parties in this case are in pari materia with clauses 19 w.p.c.24729/06 21and 21 considered by the Supreme Court. It is not disputed before methat the petitioner company is in dire financial straits. It is also notdisputed before me that the last of the settlement was in force at thetime of passing the impugned orders. Therefore, the ratio of thedecision of the Supreme Court in Barauni Refinery's case (supra)squarely applies to the facts of this case on all fours. Therefore I haveno option but to decide this case in accordance with the ratio of thatdecision. Therefore, following the decision of the Supreme Court, I allowthis writ petition and set aside the impugned orders to the extent itallows the modification of clause 48 of Ext.P1 Standing Orders.

However, the wages paid to the employees who continued inservice by virtue of the interim orders of this Court for the periodsubsequent to their attaining 55 years shall not be recovered fromthem. The extended period of service till today shall be treated asextension granted in exercise of the discretion of the management asprovided in clause 48 of Ext.P1 Standing Orders. Sd/- sdk+ S.SIRI JAGAN, JUDGE ///True copy/// P.A. to Judge w.p.c.24729/06 22