# M/S. SWADESHI COTTON MILLS CO., LTD., KANPUR v. RA.JESHW AR PRASHAD AND ORS

- **Citation:** [1961] 2 S.C.R. 359
- **Court:** Supreme Court of India
- **Decided:** 1961
- **Case number:** Civil Appeal No. 53 of 1958
- **Bench:** P. B. Gajendragadkar, A. K~ Sarkar, K. N. Wanchoo
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-swadeshi-cotton-mills-co-ltd-kanpur-v-ra-jeshw-ar-prashad-and-ors-2234
- **Pages:** 9

## Headnote

Ind11strial Disp11te-Compromise during pendency of appealValidity-Procedure--The U. P. Ind1tstl'ial Disputes Act, I947
(U. P. XXV II I of Ig47), ss. 6-c, z(t)-U. P. Industrial Disputes
Rides, Ig57, r. 5(I)-Payment of Wages Act, Ig36 (Act 4 of I93fi),
s. 23.
While this appeal by special leave, relating to an industrial
rlispute was pending in this Court a Director of the appellant
employer and a representative of the respondents' employees
made an application to the Court praying that an order might be
passed in terms of a compromise since an agreement was alleged
to have been entered into by the appellants and the respondents.
Some of the respondents contested this compromise and the court
sent issues to the Tribunal for finding whether the alleged compromise actually took place between the parties, and if so, was
it valid. The Tribunal returned findings to the effect that the
compromise did actually take place and was valid.
Those
findings were contested in the appeal.
Held, that a compromise agreement seeking to settle an
industrial dispute which was still pending decision in this Court
would not contravene the provisions of s. 23 of the Payment of
Wages Act which contemplated rights not likely to be modified
or reversed in any judicial proceedings.
The procedure prescribed by s. 6-C of the U. P. Industrial
Disputes Act and the provisions thereof did not affect the powers
of this Court, or the competence of the parties, to amicably
settle a dispute pending before it.
The procedure for obtaining an order in terms of the compromise entered into between the parties pending the appeal in
this Court is prescribed by its own rules and the provisions of
s. 2(t) of the U. P. Industrial Disputes Act and rule 5(1) of the
Rules made thereunder have no application to such case.
CIVIL
APPELLATE
JURISDICTION: Civil Appeal
No. 53 of 1958.
Appeal by special leave from the Decision dated
February 28, 1957, of the Labour Appellate Tribunal,
Bombay, in. Appeal No. III-160 of 1956.
S. P. Varma, for the appellants.
Nove,.,ber r4.
M fs. Swadeshi
360
SUPREME COURT R.EPORTS
[1961]
L. K. Jha, Janardan Sharma, R. 0. Prasad and
Maqbool Ahmad Khan, for the respondents.
Cotton Mills Co.,
1960. November 14. The Judgment of the Court
Ltd., Kanpur
was delivered by
v.
Rajeshwa•
GAJENDBAGADKAR, J.-This appeal by special
P1ashad &- Othm leave arises from an industrial dispute between the
G . d-dk 1 appellant Messrs. Swa.deshi Cotton Mills and the res-
•J•n raga a• .
d
.
l
d
h
h
l' .
pon ents, its emp oyees, an
t e s ort pre 1mma.ry
question which is raised for our decision is whether
an order should not be passed in this appeal in terms
of the compromise agreement alleged to have been
reached between the appellant and the respondents.
It appears that on December 28, 1955, an industrial
dispute between the parties was referred by the
Government of Uttar Pradesh to the Industrial Tribunal, U. P., Allahabad, for adjudication under ss. 3, 4
and 8 of the U. P. Industrial Disputes Act, 1947 (U.P.
Act XXVIII of 1947) and in pursuance of the provi-
•
sions of cl. 11 of G. 0. No. U-464(LL)/XXXVl-B-257
(LL)/1954 issued on July 14, 1954. The dispute thus referred was whether the existing rates of wages of jobbers mentioned in the annexure employed in the weaving department of the appellant need any revision; if
so, with what details and from what date ? The Tribunal tried this issue and came to the conclusion that no
case for revision had been made out by the respondents. Against this decision of the Tribunal the respondents preferred an appeal before the Labour
Appellate Tribunal. Their appeal succeeded and the
Appellate Tribunal directed that the award of the
original Tribunal should be set a.side, and that the
appellant " shall introduce from the date of reference
a uniform rate of two annas in both the old and new
sheds irrespective of the number of looms assigned to
the line jobbers". It would be noticed that as a result
of this decision the existing rates have be

## Text

2 S.C.R. SUPREME COURT REPORTS
359
M/S. SWADESHI COTTON MILLS CO.,
LTD., KANPUR
v.
RA.JESHW AR PRASHAD AND ORS.
I
(P. B. GAJENDRAGADKAR, A. K~ SARKAR
and K. N. WANCHOO, JJ.)
Ind11strial Disp11te-Compromise during pendency of appealValidity-Procedure--The U. P. Ind1tstl'ial Disputes Act, I947
(U. P. XXV II I of Ig47), ss. 6-c, z(t)-U. P. Industrial Disputes
Rides, Ig57, r. 5(I)-Payment of Wages Act, Ig36 (Act 4 of I93fi),
s. 23.
While this appeal by special leave, relating to an industrial
rlispute was pending in this Court a Director of the appellant
employer and a representative of the respondents' employees
made an application to the Court praying that an order might be
passed in terms of a compromise since an agreement was alleged
to have been entered into by the appellants and the respondents.
Some of the respondents contested this compromise and the court
sent issues to the Tribunal for finding whether the alleged compromise actually took place between the parties, and if so, was
it valid. The Tribunal returned findings to the effect that the
compromise did actually take place and was valid.
Those
findings were contested in the appeal.
Held, that a compromise agreement seeking to settle an
industrial dispute which was still pending decision in this Court
would not contravene the provisions of s. 23 of the Payment of
Wages Act which contemplated rights not likely to be modified
or reversed in any judicial proceedings.
The procedure prescribed by s. 6-C of the U. P. Industrial
Disputes Act and the provisions thereof did not affect the powers
of this Court, or the competence of the parties, to amicably
settle a dispute pending before it.
The procedure for obtaining an order in terms of the compromise entered into between the parties pending the appeal in
this Court is prescribed by its own rules and the provisions of
s. 2(t) of the U. P. Industrial Disputes Act and rule 5(1) of the
Rules made thereunder have no application to such case.
CIVIL
APPELLATE
JURISDICTION: Civil Appeal
No. 53 of 1958.
Appeal by special leave from the Decision dated
February 28, 1957, of the Labour Appellate Tribunal,
Bombay, in. Appeal No. III-160 of 1956.
S. P. Varma, for the appellants.
Nove,.,ber r4.
M fs. Swadeshi
360
SUPREME COURT R.EPORTS
[1961]
L. K. Jha, Janardan Sharma, R. 0. Prasad and
Maqbool Ahmad Khan, for the respondents.
Cotton Mills Co.,
1960. November 14. The Judgment of the Court
Ltd., Kanpur
was delivered by
v.
Rajeshwa•
GAJENDBAGADKAR, J.-This appeal by special
P1ashad &- Othm leave arises from an industrial dispute between the
G . d-dk 1 appellant Messrs. Swa.deshi Cotton Mills and the res-
•J•n raga a• .
d
.
l
d
h
h
l' .
pon ents, its emp oyees, an
t e s ort pre 1mma.ry
question which is raised for our decision is whether
an order should not be passed in this appeal in terms
of the compromise agreement alleged to have been
reached between the appellant and the respondents.
It appears that on December 28, 1955, an industrial
dispute between the parties was referred by the
Government of Uttar Pradesh to the Industrial Tribunal, U. P., Allahabad, for adjudication under ss. 3, 4
and 8 of the U. P. Industrial Disputes Act, 1947 (U.P.
Act XXVIII of 1947) and in pursuance of the provi-
•
sions of cl. 11 of G. 0. No. U-464(LL)/XXXVl-B-257
(LL)/1954 issued on July 14, 1954. The dispute thus referred was whether the existing rates of wages of jobbers mentioned in the annexure employed in the weaving department of the appellant need any revision; if
so, with what details and from what date ? The Tribunal tried this issue and came to the conclusion that no
case for revision had been made out by the respondents. Against this decision of the Tribunal the respondents preferred an appeal before the Labour
Appellate Tribunal. Their appeal succeeded and the
Appellate Tribunal directed that the award of the
original Tribunal should be set a.side, and that the
appellant " shall introduce from the date of reference
a uniform rate of two annas in both the old and new
sheds irrespective of the number of looms assigned to
the line jobbers". It would be noticed that as a result
of this decision the existing rates have been revised
and the revision has been ordered to take effect
retrospectively from the date of reference. It is
against this decision of the Labour Appellate Tribunal
that the appellant has preferred the present appeal by
special leave.
2 S.C.R. SUPREME COURT REPORTS
361
Pending this appeal in this Court the appellant puri96o
ported to enter into a compromise with the respon·
Ml
,
d , .
d
d h
f h
.
d
d
s. - wa es,,.
ents an t e terms o t e compromise were re uce Cotton Mills co ..
to writing, and in pursuance of the said compromise
Ltd., Kanpur
a.n application was ma.de to this Court on February
v.
26, 1958, signed by Mr. Bagla, on behalf of the appelRajes/iwar
la.nt in his capacity as a. Director of the appellant, a.nd Prashad &- Others
Mr. Maqbool Ahmad Khan, for the respondents, in his Gajelldiacadl<ar J.
ca.pa.city as the General Secretary of the Suti Mill
Ma.~door Sabha, Kanpur. This application set out
the material terms of the compromise. One of the
terms of the compromise is that the revised rate
should take effect not from December 28, 1955, which
is the date of reference but from July I, 1957. Certain other modifications have a.lso been made in the
decision under appeal.
Before the appeal could be placed on the Boa.rd for
passing orders in terms of this compromise an application was ma.de on behalf of some of the respondents
alleging that the Genera.I Secretary Mr. Khan had no
authority or power to enter into any compromise as a
representative of the respondents, and that the compromise alleged to have been entered into by him with
the appellant was not acceptable to the respondents.
In support of this case the application referred to a
resolution passed by the General Council of the Mazdoor Sabha. whereby it was declared that no office
bearer could conclude an agreement with an employer
a.bout an industrial dispute without the consent of the
General Council, and reliance was also placed on the
relevant provisions in the constitution of the Mazdoor
Sabha.
Thereafter the petition for compromise was placed
before this Court for hearing on April 10, 1960, and
the Court directed that the application for recording
compromise as well as the appeal itself should both
be placed together for hearing before the Court as soon
as the parties file their respective statements of the
case. After the statements were filed the appeal and
the petition were placed before this Court on Ma.y 5,
1960, and the Court by an interlocutory judgment
46
362
SUPREME COURT REPORTS
[1961]
'960
sent two issues to the Tribunal with a direction that
M ;s. swadeshi the Tribunal should hear the parties on those issues
Collon Mills Co., and make its findings thereon. The two issues were:
Ltd., Kanpu, (1) Has the compromise set up by the appellant taken
. v.
place between the parties ; (2) If yes, is the com prop
Rha;des;w•0'1,
mise valid? In pursuance of this order the Tribunal
rns a
~ ""' h
d d
"d
h
d th
·
d
d .
_
as recor e ev1 ence, ear
e parties a.n ma. e its
Gajendracadkar ]. findings. It has found that the compromise in fa.ct
has ta.ken place as alleged in the petition made before
this Court in that behalf, and that the said compromise is valid. In dealing with the first question of
fa.ct the Tribunal has considered the evidence exhaustively in the light of the background of the dispute
between the parties; it has found that negotiations
went on between the parties for a fairly long time
during which period the parties discussed the pros
and cons of the compromise, that during these nego·
tiations Mr. Khan was watchful of the interests of the
respondents, that the compromise had been approved
by the workmen concerned, that on the whole it is to
their advantage and does not a.t a.II militate against
the accepted principles of industrial adjudication, and
what is more it has been acted upon and has not
remained a mere pa.per transaction. It has explained
that the opposition to the compromise proceeded substantially from the dispute between Mr. Khan, the
Secretary, and Mr. Ba.jpai, the President, and the
Tribunal felt no doubt that the compromise was the
result of bona. fide attempt on the pa.rt of both the
parties to settle the dispute amicably in order to
create goodwill and co-operation amongst the emplo·
yer and the employees.
On the question of law raised by the second issue
the Tribunal has held that the compromise is perfectly
valid. It has considered the relevant provisions of
the constitution of this Sabha, the practice prevailing
in regard to such compromises and to several agreements of compromise entered into consistently with
the said practice. It was urged before the Tribunal
1
that the compromise is invalid under s. 6-B of the
U.P. Industrial Disputes Act, 1947, a.s well a.s s. 2(vi)
(c) of the Payment of Wages Act, 1936 (Act 4 of 1936).
' \
2 S.C.R. SUPREME COURT REPORTS
363
These contentions have been rejected by the Tribunal.
1960
In the result the findings recorded on both the issues
•
J.'
f th
·
M/s. Swadeshi
a.rem ia.vour o
e compromise.
c 11
M'll c
After these findings were received in this Court, the
0
u;~. ;a~pu/"'
appeal a.nd the compromise petition have now come
v.
before us for fine.I disposal.
The finding of fa.ct
Rajeshwar
recorded by the Tribunal on the first issue has not Prashad &- Others
been and cannot be challenged befo~e us. It must Ga ·end;;;--;;dkar J.
therefore be taken to have been established that at the
1
g
relevant time Mr. Khan was the General Secretary of
the respondents' Sabha, and a.s such was entitled to
represent them and did represent them during the
course of the present adjudication proceedings, and
that the compromise reached between him and the
appellant is the result of mutual discussions carried
on for some time and its terms on the whole are beneficial to the respondents. The practice prevailing in
this Sabha and a large number of precedents which
a.re consistent with the said practice indicate clearly
that the Secretary of the Union who represents the
workmen in industrial disputes · has always been
authorised and has exercised his authority to settle
such disputes when it was thought reasonable and
proper to do so. As we have often indicated it is
always desirable that industrial disputes should be
amicably settled because such settlement conducos to
happy industrial relationship and encourages eo-opera.tion between the parties. Tha.t is why when industrial disputes a.re brought before this Court under Art.
136 of the Constitution this Court generally appreciates attempts made to settle disputes amicably, and in
proper cases encourages such settlements. Mr. Jha, for
the respondents, however, contends that though amicable settlement of industrial disputes may otherwise be
desirable, in Ia.w such settlement or compromise is illega.I. If we come to the conclusion that compromise
of industrial disputes pending an appeal is prohibited
by law, or is otherwise inconsistent with such provisions it may be necessary to hold that the present
compromise is bad in law however much amicable
settlement of industrial disputes may otherwise be
desirable. 'fherefore the question which arises for our
364
SUPREME COURT REPORTS
(1961]
1960
decision on the present compromise petition is : Is the
contention raised by Mr. Jha correct that the comproM /s. Swadeshi
Cotto" Mill< co. mise is invalid in law?
Ltd., Kanpur '
The first point urged by Mr. Jha in support of this
v.
argument is that the present compromise is prohibited
Raj.,hwar
bys. 23 of the Payment of Wages Act. This Act has
Prashad & Others been passed to regulate the payment of wages to cerGajend~:dkar J. tain c.Iasses of persons employed in industry, and
there is no doubt that the wages as revised by the
Labour Appellate Tribunal in the present case would
constitute wages under s. 2 (vi) of this Act. Section 23
provides that any contract or agreement, whether
made before or after the commencement of this Aot,
whereby an employed person relinquishes any right
conferred by this Act shall be null and void in so
far as it purports to deprive him of such right. The
relevant provisions of this Act require the fixation of
wage periods, provide for the t-ime of payment of
wages, authorises certain deductions, and permits the
imposition of fines only subject to the conditions specified in that behalf. Section 15 of the Act provides
for the determination of claims arising out of deduction of wages or delay in payment of wages and
penalty for malicious or vexatious claims. Section 16
prescribes for the making of an application in which
such claims can be set up; and s. 18 provides for the
powers for the authorities appointed under the Act.
Mr. Jha contends that the revised wage structure
directed by the Labour Appellate Tribunal entitles
the respondents to claim the respective amounts there
indicated as their wages, and the effect of the impugned compromise is that the respondents are relinquishing a part of their right in that behalf. Mr. Jha contends that in giving up their claim for the retrospective operation of the decision of the Labour Appellate
Tribunal for a substantial part of the period the respondents are required to contra.ct themselves out of
their legal rights conferred by the award and therefore referable to this Act, and that makes the compromise invalid. This argument is misconceived because
it fallaciously assumes that the decision under appeal
has become final and that the rights accruing under
2 S.C.R. SUPREME COURT REPORTS
365
the said decision would not be and cannot be affected
i96o
by any compromise. The most significant fa.ct to
M/
5
d h'
remember in this .connection is th.at. the decis~on ?11 Cotto: J1.~~1:s ~o.,
which the alleged rights are based is itself sub3ect to Ltd. Kanpur
an appeal before this Court, and in that sense it is
v.
not a final decision at all; it is liable to be reversed
Rajeshwar
or modified, and that being so the rights claimable Prashad 6- Otkm
under the said decision a.re also liable to be defeated G . ·-'-dk 1
•
d
I
h
h
. d
. 1 a;e ..... raga
ar .
or materially affecte .
n sue a case t e m . ustria
dispute would undoubtedly be pending before this
Court, and it would be idle for Mr. Jha to contend
that an attempt to settle such a. dispute and not to
invite a. decision of this Court contravenes the provisions of s. 23 of this Act. Just a.s an industrial dispute
could have been settled between the parties either
before .it was referred for adjudication to the Industrial Tribunal, or after it was referred and before the
a.ward was pronounced by the Tribunal, so would it be
open to the parties to settle the dispute so long a.s it
was pending either before the Labour Appellate Tribunal or before this Court. The provisions of s. 23 of
this Act postulate certain definite rights which a.re
not likely or liable to be modified or reversed in any
pending judicial proceedings, and since this factor is
absent in cases where an appeal is pending before
this Court it would not be reasonable to rely on the
said provisions and contend that they in substance
prevent or prohibit amicable settlement of disputes.
The other argument urged against the validity of
the compromise is based on the provisions of s. 6-C of
the U. P. Industrial Disputes Act, 1947. This section
corresponds substantially to s. 19 of the Industrial
Disputes Act XIV of 1947. It provides, inter alia,
that an award shall in the first instance remain in
operation for the period of one year or such shorter
period as may be specified therein, and gives the State
Government power to extend the period of operation
from time to time if it thinks fit. It also provides that
the State Government, either on its own. motion or on
the application of any party bound by the a.ward,
shorten the period of its operation, if it is shown that
there has been a. material change in the circumstances
366
SUPREME COURT REPORTS
[1961]
'960
on which the award was based. The argument is
Ml -5-d h. that any modification in the award can only be made
s . . wa es I
b
d
.
h
cotton Mills co., Y a optrng t e procedure prescribed by s. 6-C. In
Ltd., Kanpur our opinion there is no substance in this argument.
v.
Section 6-C undoubtedly confers upon the State
Rajeshwar
Government certain powers to fix the duration of the
Praska~ others operation of the award, but there can be no doubt
Gajendragadkar J. that the section can have no bearing on the powers of
this Court in dealing with an industrial dispute
brought before it under Art. 136 of the Constitution.
The award to which s. 6-C refers is an award which
has become final in the sense that it is no longer
subject to consideration by any Tribunal or Court. So
long as an award is pending before a Tribunal or a
Court the jurisdiction of the Tribunal or the Court to
deal with it in accordance with law is not affected by
s. 6-C, and the competence of the parties to settle
their dispute pending before the Tribunal or the Court
is also not affected or impaired by the said section,
In other words, what we have said about the argument based on the provisions of s. 23 of the Payment
of Wages Act applies with equal force to the present
argument as well.
Then it is contended that the impugned compromise
is a settlement within the meaning of s. 2(t) of the
U. P. Act and as such it can;be executed only in the
manner prescribed by the Act. Section 2(t) defines a
settlement as one which is arrived at in the course of
conciliation proceedings and as including a written
agreement between the employer and the workmen
arrived at otherwise than in the course of conciliation
proceedings when such an agreement has been signed
between the parties thereto in such manner as may
be prescribed and a copy thereof has been sent to the
State Government and the conciliation officer.
Rule
5(1) of the U. P. Industrial Disputes Rules, 1957,
prescribes the procedure for recording a settlement as
defined by s. 2(t). It is true that this procedure has
not been followed, but it is difficult to understand how
s. 2(t) or the procedure prescribed by r. 5(1) can have
any application to a . compromise agreement which
has been entered into between the parties pending the
2 S.C.R. SUPREME COURT REPORTS
367
a.ppea.l in this Court. The compromise in question is
intended to be filed in this Court for the purpose of M/s. Swadeslii
enabling the parties to request this Court to pass an Cotton Mills Co.,
order in terms of the said compromise. The procedure Ltd., Kanpur
for obtaining such an order which has to be followed
. v.
is the procedure prescribed by the rules of this Court, P
Rka;des;wa0•1h
just as if a compromise was reached before the Triburas a_.,,.
ers
nal the procedure to be followed before it would becajendragadkar J.
the procedure prescribed by its rules. Therefore we
have no doubt that the compromise in question cannot
attract the procedure prescribed by r. 5(1).
The result is that the finding recorded by the Tribunal that the compromise in question is valid is
obviously right a.nd must be confirmed.· Since it is
found that the compromise in fact has ta.ken place
and is otherwise valid, we have no hesitation in directing that an order should be drawn in terms of the
said compromise in the present appeal.
Order accordinyly.
THE STATE OF BOMBAY
v.
M/S. RATILAL V ADILAL AND BROS.
(J. L. KAPUR, M. HIDAY.A.TULLAR
and J. C. SHAH JJ.)
Sales Tax-' Dealer'-Meaning of-Appeal by special leaveWhenavailable-Bombay Sales Tax Act, I953 (Bom. III of I95J),
ss. 27(I), (b), (c), 3o(I), 34(I) and (z)-Constitution of India,
Art. I36.
One Nanalal Karsandas, who was a brick manufacturer,
held a priority certificate for purchasing coal under the Colliery
Control Order and purchased a certain quantity of coal from
M/s. S. G. Rungta Colliery through the respondents who were
commission agents. The respondents applied to the Collector
for determining whether they could be described as "dealers"
under the Bombay Sales Tax Act, 1953. The Collector held
that they were dealers but the Sales Tax Tribunal held otherwise. No step was taken thereafter for a reference to the High
Noveniber r5.