# NATIONAL ENGINEERING INDUSTRIES LTD v. ST A TE OF RAJAS THAN AND ORS - **Citation:** [1999] Supp. 5 S.C.R. 87 - **Court:** Supreme Court of India - **Decided:** 1999 - **Case number:** Civil Appeal No. 16832 of 1996 - **Bench:** S.B. Majmudar, D.P. Wadhwa, A.P. Misra - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/national-engineering-industries-ltd-v-st-a-te-of-rajas-than-and-ors-17018 - **Pages:** 30 ## Headnote B Industrial Disputes Act, 1947. Sections 10(1) (d), 12(3) and (5), 18 (1) and (3). 19-/ndustrial C Dispute-Conciliation proceedings-Settlement with representative union in conciliation proceedings-Other union not party to settlement seeking reference of dispute-Notification for reference issued-Whether other union can seek reference of dispute-Held, settlement with representative union in conciliation proceedings is binding on all workmen of establishment in the · interest of industrial peace-Recognized union having majority of workers D expected to protect legitimate interest of labour-Under the facts and circumstances, notification for reference of dispute quashed-Rajasthan Industrial Disputes Amendment Act, 1958-Sections 2(000),9-D, 9-E, 9-FTrade Union Act, 1926-Section 4. Sections JO(/) (d) & 12(3) and (5)-Writ petition challenging E notification of reference of dispute-No existence of industrial dispute alleged-Jurisdiction of High Court-Held, High Court has jurisdiction to entertain writ petition and examine question of Jurisdiction of Industrial Tribunal-If there is no industrial dispute, Government lacks power to make any reference-Industrial Tribunal cannot go into question of validity of F reference. Words & Phrases-'Representative Union'-Meaning of in the contμt of the Rajasthan Industrial Disputes Amendment Act, 1958 and in common parlance. Three unions namely, L, Sand Win the factory of appellant made charter of demands and raised industrial disputes; conciliation proceedings were initiated and conciliation settlement/tri-partite settlement was arrived G at with L and S but failure report was submitted in respect of proceedings regarding W. All employees including members ofW accepted benefits under H 87 88 SUPREME COURT REPORTS [1999) SUPP. 5 S.C.R. A the settlement. L is the representative union and has majority of workers oit its roll and registered as such under the provisions of the Industrial Disputes Act as amended by the Rajasthan Industrial Disputes Amendment Act, 1958. W filed writ petition seeking reference of disputes to Industrial Tribunal and during its pendency, Government issued notification for reference of disputes relating to demands raised by W. The fact of said reference was not brought B to the notice of High Court which allowed writ petition directing the State Government to decide question of reference of disputes after hearing the parties. Thereafter, appellant submitted representation to State Government seeking withdrawal of reference and for fresh decision after hearing it. Since representation was not accepted by State Government, appellant filed writ C petition challenging notification and validity of reference which was dismissed by Single Judge and upheld in appeal by Division Bench • Hence this appeal by the appellant-employer. Appellant-employer contended that members of W had taken advantage of benefits under the settlement and thus, there was no dispute pending D requiring reference; that charter of demands of W was almost similar/ identical to the other Unions most of which were covered by the said settlement; that no opportunity was granted to appellant to place its case before State Government despite judgement of High Court; that L is representative union and the said settlement with it was binding under Section E 18(3) of the Act on all workers of appellant; that impugned reference was destructive of industrial peace and defeated the very purpose and object of the Act; that Industrial Tribunal could not go into the question of jurisdiction and also could not examine justness and fairness of the settlement; that charter of demands of W could not be termed as notice under Section 19 of the Act; that W was not representing majority of workers and could not give F notice in view of Section 19 (7) of the Act; and that there was non-application . of mind by State Government in making reference. • W contended that tripartite settlement was invalid as it was entered into on Sunda ## Text _Characters 0–39,963 of 79,489. This is a partial read: ask again with offset=39963 for what follows._ NATIONAL ENGINEERING INDUSTRIES LTD. A v. ST A TE OF RAJAS THAN AND ORS. DECEMBER I, 1999 [S.B. MAJMUDAR, D.P. WADHWA AND A.P. MISRA, JJ.] B Industrial Disputes Act, 1947. Sections 10(1) (d), 12(3) and (5), 18 (1) and (3). 19-/ndustrial C Dispute-Conciliation proceedings-Settlement with representative union in conciliation proceedings-Other union not party to settlement seeking reference of dispute-Notification for reference issued-Whether other union can seek reference of dispute-Held, settlement with representative union in conciliation proceedings is binding on all workmen of establishment in the · interest of industrial peace-Recognized union having majority of workers D expected to protect legitimate interest of labour-Under the facts and circumstances, notification for reference of dispute quashed-Rajasthan Industrial Disputes Amendment Act, 1958-Sections 2(000),9-D, 9-E, 9-FTrade Union Act, 1926-Section 4. Sections JO(/) (d) & 12(3) and (5)-Writ petition challenging E notification of reference of dispute-No existence of industrial dispute alleged-Jurisdiction of High Court-Held, High Court has jurisdiction to entertain writ petition and examine question of Jurisdiction of Industrial Tribunal-If there is no industrial dispute, Government lacks power to make any reference-Industrial Tribunal cannot go into question of validity of F reference. Words & Phrases-'Representative Union'-Meaning of in the contμt of the Rajasthan Industrial Disputes Amendment Act, 1958 and in common parlance. Three unions namely, L, Sand Win the factory of appellant made charter of demands and raised industrial disputes; conciliation proceedings were initiated and conciliation settlement/tri-partite settlement was arrived G at with L and S but failure report was submitted in respect of proceedings regarding W. All employees including members ofW accepted benefits under H 87 88 SUPREME COURT REPORTS [1999) SUPP. 5 S.C.R. A the settlement. L is the representative union and has majority of workers oit its roll and registered as such under the provisions of the Industrial Disputes Act as amended by the Rajasthan Industrial Disputes Amendment Act, 1958. W filed writ petition seeking reference of disputes to Industrial Tribunal and during its pendency, Government issued notification for reference of disputes relating to demands raised by W. The fact of said reference was not brought B to the notice of High Court which allowed writ petition directing the State Government to decide question of reference of disputes after hearing the parties. Thereafter, appellant submitted representation to State Government seeking withdrawal of reference and for fresh decision after hearing it. Since representation was not accepted by State Government, appellant filed writ C petition challenging notification and validity of reference which was dismissed by Single Judge and upheld in appeal by Division Bench • Hence this appeal by the appellant-employer. Appellant-employer contended that members of W had taken advantage of benefits under the settlement and thus, there was no dispute pending D requiring reference; that charter of demands of W was almost similar/ identical to the other Unions most of which were covered by the said settlement; that no opportunity was granted to appellant to place its case before State Government despite judgement of High Court; that L is representative union and the said settlement with it was binding under Section E 18(3) of the Act on all workers of appellant; that impugned reference was destructive of industrial peace and defeated the very purpose and object of the Act; that Industrial Tribunal could not go into the question of jurisdiction and also could not examine justness and fairness of the settlement; that charter of demands of W could not be termed as notice under Section 19 of the Act; that W was not representing majority of workers and could not give F notice in view of Section 19 (7) of the Act; and that there was non-application . of mind by State Government in making reference. • W contended that tripartite settlement was invalid as it was entered into on Sunday; that reference could have been made in respect of demands raised by W which were not covered by the settlement; and that settlement was not G entered into during conciliation proceedings and hence was not binding on it. Allowing the appeal, the Court HELD : 1.1. High Court has jurisdiction to entertain a writ petition when there is allegation that there is no industrial dispute and none apprehended H which could be subject matter of reference for adjudication to the Industrial NATIONAL ENGINEERING INDUS. LTD. v. ST ATE 89 Tribunal under Section 10 of the Act. It is a question of jurisdiction of the A Industrial Tribunal, which could be examined by the High Court in its writ jurisdiction. It is the existence of the industrial dispute which would clothe the appropriate Government with power to make the reference and the Industrial tribunal to adjudicate it If there is no industrial dispute in existence or apprehended appropriate Government lacks power to make any reference. B (112-E-FJ Workman Employed by Hindustan Lever Ltd. v. Hindustan Lever Ltd., (1984) 4 SCC 392 and The Management of Express Newspapers Ltd v. Workers & Staff Employed under it and Ors., [1963) 3 SCR 540, relied on. 1.2. Industrial Tribunal is the creation of statute and it gets jurisdiction C on the basis of reference. It cannot go into the question on validity of the reference. Question before the High Court was one of jurisdiction which it failed to consider. [115-CJ 2.1. A settlement of dispute between the parties themselves is to be D preferred, where it could be arrived at, to industrial adjudication, as the settlement is likely to lead to more lasting peace than an award. Settlement is arrived at by the free will of the parties and is a pointer to there being goodwill between them. When there is a dispute that the settlement is not bonafide in nature or that it has been arrived at on account of fraud, misrepresentation or concealment of facts or even corruption and other inducements E it could be subject matter of yet another industrial dispute which an appropriate Government may refer for adjudication after examining the allegations as there is an underlying assumption that the settlement reached with the help of the Conciliation officer must be fair and reasonable. [112-H; 113-A-B] F 2.2. A settlement which is sought to be impugned has to be scanned and scrutinized. Sub-sections (1) and (3) of Section 18 divide settlements into two categories, namely, (1) those arrived at outside the conciliation proceedings and (2) those arrived at in the course of conciliation proceedings. A settlement which belongs to the first category has limited application in that it merely G binds the parties to the agreement but the settlement belonging to the second category has extended application since it is binding on all the parties to the industrial disputes, to all others who were summoned to appear in the conciliation proceedings and to all persons employed in the establishment or part of the establishment, as the case may be, to which the dispute related on the date of the dispute and to all others who joined the establishment thereafter. H 90 SUPREME COURT REPORTS [1999) SUPP. 5 S.C.R. A A settlement arrived at in the course of conciliation proceedings with a recogni7.ed majority union will be binding on all workmen of the establishment, even those who f!elong to the minority union which had objected to the same. Recognized union having majority of members is expected to protect the legitimate interest of labour and enter into a settlement in the best interest of labour. This is with the object to uphold the sanctity of settlement reached B with the active assistance of the Conciliation Officer and to discourage an individual employee or minority union from scuttling the settlement. When a settlement is.arrived at during the conciliation proceedings it is binding on the members of Was laid down by Section 18(3) (d) of the Act. It would ipso facto bind all the existing workmen who are all parties to the industrial dispute C and who may not be members of unions that are signatories to such settlement under Section 12(3) of the Act. Industrial Disputes Act is based on the principle of collective bargaining for resolving industrial disputes and for maintaining industrial peace. Thus, reference in itself was bad as the tripartite settlement did bind the members of W as well. [113-B-F; 116-F] D The Sirsilk Ltd and Ors. v. Government of Andhra Pradesh and Anr., [1964) 2 SCR 448 and K.C.P. Limitedv. Presiding &Officer and Ors., (1996] 10 sec 446, relied on. Barauni Refinery Pragatisheel Shramik Parishad v. Indian Oil E Corporation Ltd., (1991) 1SCC4; P. Virudhacham and Ors. v. Management of Lotus Mills and Anr., (1998) 1 SCC 650 and Ram Pukar Singh and Ors. v. Heavy Engineering Corporation and Ors., [1994) 6 SCC 145, affirmed. 3. Representative Union and the procedure for its registration is defined F under Sections 2(000), 9-D, 9-E and 9-F of the Rajasthan Industrial Disputes Amendment Act, 1958. As to what is representative union is not defined in the Industrial Disputes Act but in common parlance it would mean that it represents all the workers. Once L is the representative Union, it is difficult to see the role of W. It is not the case of W that registration of L is liable to G be cancelled on any ground whatsoever. (114-A; E-F] 4. Notice given by Wunder sub-section (2) of Section 19 of the Act is invalid as it did not represent majority of the persons bound by the settlement nor it is a representative union. [114-F) H 5. There is no bar in having conciliation proceedings on a holiday and . _ NATIONAL ENGINEERING INDUS. LTD. v. STATE [D.P. WADHWA, J.] 91 to arrive at a settlement. (115-A) 6. The recitals to the tripartite settlement clearly show that the settlement was arrived at during the conciliation proceedings and therefore, the contention to the contrary is without any basis. (115-E; 116-E) A 7. After the judgment had been announced and directions issued by the B High Court to hear the appellant it was incumbent of the State Government, in the circumstances of the case, to recall the reference. It could not direct the appellant to raise its objection to reference before the Industrial Tribunal for which Industrial Tribunal certainly lacked jurisdiction. State Government before making the reference did not consider all the relevant considerations C which would clothe it with the power to make the reference under Section 10 of the Act Wholesale reference of all the disputes in the charter of demands ofW for adjudication was also bad in as much as many of such disputes were already the subject matter of tripartite settlement. This also shows non- !· application of mind by the State Government in making the reference. D (116-B-D] CIVIL APPELLATE JURISDICTION : Civil Appeal No. 16832 of 1996. From the Judgment and Order dated 25.3.96 of the Rajasthan High Court in C.S.A. No. 229of1993. G.B. Pai, K.N. Tripathy, D. Mohanty, K.K. Mahalik and Janaranjan Das for the Appellant. E Aman Hingorani and Ms. Reema Bhandari, for Mis Hingorani & Associates for the Respondents. F The Judgment of the Court was delivered by D.P. W ADHW A, J. Appellant, and employer, is aggrieved by judgment dated March 25, 1996 of the Division Bench of the Rajasthan High Court G affirming in appeal the Judgment dated December 15, 1992 of the learned single Judge. By this judgment the learned single Judge negatived the challenge of the appellant to the validity of the notification issued by the State Government under Section 10 (1) (d)1 read with Section 12 (5)2 of the Industrial Disputes Act, 1947 (for short, the 'Act') to adjudicate the disputes between the appellant H 92 SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R. A and the National Engineering Industries Workers' Union (for short, the workers' Union) in respect of the demands raised by the Workers' Union. This notification is as under: B c D E F G H "Government of Rajasthan Department of Labour No. Pl ( l) ( 14171 )/L&E/86 Jaipur dated 17 March, 1989 110. Reference of disputes to Boards, Courts or Tribunals.-(!) Where the appropriate Government is of opinion that any industrial dispute exists or is apprehened, it may at any time, by order in writing,- (a) (b) (c) (d) refer the dispute or any matter appearing to be connected with, or relevant to, the dispute, whether it relates to any matter specified in the Second Schedule or the Third Schedule, to a Tribunal for adjudication: Provided that where the dispute relates to any matter specified in the Third Schedule and is not likely to affect more than one hundred workmen, the appropriate Government may, if it so thinks fit, make the reference to a Labour Court under clause(c) : Provided further ......... . Provided also .............. " 212. Duties of conciliation officers.-(1) Where any industrial dispute exists is apprehended, the conciliation officer may, or where the dispute relates to a public utility service and a notice under Section 22 has been given, shall, hold conciliation proceedings in the prescribed manner. 2. The conciliation officer shall, for the purpose of bringing about a settlement of the dispute without delay, investigate the dispute and all matters affecting the merits and the right settlement thereof and may do all such things as he thinks fit for the purpose of inducing the parties to come a fair and amicable settlement of the dispute. 3. If a settlement of the dispute or of any of the matters in dispute is arrived at in the course of the conciliation proceedings the conciliation officer shall send a report thereof to the appropriate Government or an officer authorised in this behalf by the appropriate Government together with a memorandum of the settlement signed by the parties to the dispute. 4. If no such settlement is arrived at, the conciliation officer shall, as soon as practicable after the close of the investigation, send to the appropriate Government a full report setting forth the steps taken by him for ascertaining the facts and circumstances relating to the dispute and for bringing about a settlement thereof, together with a full statement of such facts and circumstances, and the reasons on account of which, in his opinion, a settlement could not be arrived at. ... -< NATIONAL ENGINEERING INDUS. LTD. v .. STATE [D.P. WADHWA, J.) 93 Notification A Whereas an industrial dispute3 as described below has arisen between the Management of National Engineering Industries Ltd., Jaipur and President National Engineering Industries Workers' Union, E-4, M.L.A. Quarters, Jaipur. B Whereas the Conciliation officer, Jaipur has reported that no settlement was arrived at: Whereas the State Government after considering the report of the above Conciliation Officer satisfied that the matter is fit to be referred to the Industrial Tribunal. c Therefore, now the State Government under powers conferred on it under section IO sub-section (1) clause (d) read with section 12 subsection (3) of the Industrial Disputes Act 1947 (Act 4 of the year 1947) hereby refers the above dispute for adjudication to Industrial Tribunal Rajasthan Jaipur duly constituted by the State Government under the D Industrial Disputes Act, 1947 (Act 4 of the year 1947). DISPUIE In the 24 point charter of demands made by the President National. Engineering Industries Workers' Union, B-4, M.L.A. Quarters before E the Management of National Engineering Industries Ltd., Jaipur (Charter of demands annexed) is fair and proper. S. If on a consideration of the report referred to in sub-scction(4), the appropriate Government is satisfied that there is a case for reference to a Board, Labour Court, Tribunal or National Tribunal, it may make such reference. Where the appropriate F government docs not make such a reference it shall record and communicate to the parties concerned its reasons therefore. 6. A report under this section shall be submitted within fourteen days of the commencement of the conciliation proceedings or within such shorter period as may be fixed by the appropriate Government : Provided that, subject to the approval of the conciliation officer, the time for the G submission of the report may be extended by such period as may be agreed upon in writing by all the parties to the dispute. 3"2(k) "industrial dispute" means any dispute or difference between employers, or between emp\o}'ers and workmen, or between workmen and workmen, which is connected wittt the employment or non-employment or the terms of employment or with the conditions of labour, of any person; H A B 94 SUPREME COURT REPORTS [1999) SUPP. 5 S.C.R. If not to what the workmen are entitled ? Annexed: Charter of demands By Order of the Governor (R.P. Tiwari) Special Secretary to the Government It would be appropriate at this stage to know the backgro:.md under which the reference came to be made. Appellant is a company registered under the Companies Act with its registered office at Calcutta. One of its factories is located at Khatipura Road, C Jaipur in the State of Rajasthan. There are three unions with which we are concerned and these are: (I) National Engineering Industries Labour Union (for short, the 'Labour Union'); (2) National Engineering Industries Staff Union (for short, the 'Staff D Union'); and (3) the Workers' Union referred to above. It is stated that Labour Union has majority of the workers on its roll; is recognised, and is the representative union and registered as such under the provisions of the Act as amended by the Rajasthan Industrial Disputes Amendment Act, 1958. In 1983 all the three unions made their charter of demands. A tripartite settlement" arrived at between the management, Labour Union and the staff union. In E respect of demand made by the Workers Union failure report was submitted. Worker' Union made representation to the State Government for referring their disputes for adjudication. This request was, however, declined by the State Government in view of the tripartite settlement already reached between the repre.sentative union, the Staff Union and the management. The settlement F was to remain valid and operative till September, 1986. All the three union made fresh charter of demands in 1986 which were identical in almost all respect. Conciliation proceedings were initiated and though failure report was submitted by the Conciliation Officer in respect of the proceedings regarding the Workers' Union, conciliation settlement was arrived at with the Labour Union and the Staff Union . It was a conciliation settlement and was to be G in operation for a period of the three years ending September 30, 1989. It is H 42(p) "settlement" means a settlement arrived at in the course of conciliation proceeding and includes a written agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceeding where such agreement has been signed by the parties thereto in such manner as may be prescribed and copy thereof has been sent to an officer authorised in this behalf by the appropriate Government and the conciliation officer. NATIONAL ENGINEERING INDUS. LTD. v. STATE [D.P. WADHWA, J.] 95 not disputed that all the employees of the appellant including the members A of the 'Workers' Union accepted the benefits under this tripartite settlement. On the charter of demands raised by the Workers' Union and on which the Conciliation Officer had submitted a failure report, the State Government did not make any order for reference of the disputes nor did it refuse to make reference. Workers' union then filed a writ petition in the High Court requiring B the State Government to make reference of their disputes to the Industrial Tribunal under the provisions of the Act. This writ petition was decided by Division Bench of the High Court on March 23, 1989 whereby it was Q_irected to the State Government to decide the question on the failure report of the Conciliation Officer whether to make or not to make the reference. The· State C Government was required to decide the question within two months from the date of the judgment, i.e., March 23, 1989. High Court also observed that it would be open to the appellant to raise all the contentions before the state Government and the State Government would or would not make a reference only after hearing the parties. However before the decision of the High Court, the State Government, in the meantime, issued the notification dated March D 17, 1989 for reference of the disputes relating to the demands raised by the Workers' Union. We have already set out above the notification dated March 17. 1989 making reference of the disputes to the Industrial Tribunal. Appellant thereafter submitted a representation dated April 3, 1989 to the State Government drawing its attention to the decision of the High Court and requesting that E the State Government might withdraw the reference and take a fresh decision after hearing the appellant. This, it appears, was not acceded to. The fact that the State Government had already made a reference on March 17, 1989 was not brought to the notice of the High Court when it decided the writ petition of the Workers' Union on March 23,1989. Since the state Government did not accept the request of the appellant, it filed a writ petition in the High Court F challenging the validity of the reference. As noted above, the writ petition was dismissed by the learned single Judge. The appeal filed by the appellant before the Division Bench also met the same fate. That is how the matter has come before us, after this court granted leave to appeal against the judgment of the High Court. G Appellant has challenged the notification on the following counts: I. There was no dispute pending at the time which could be the subject matter of the reference inasmuch as under the tripartite settlement the members of the Workers' Union had also already H 96 A B c D E SUPREME COURT REPORTS (1999) SUPP. 5 S.C.R. taken advantage of the benefits thereunder. State Government had thus no jurisdiction to make the reference. 2 Workers' Union was not a representative union within the meaning of section 9-Es of the Rajasthan Act, 34 of 1958 as amended by the Rajasthan Act 14 of 1970. 3. Charter of demands by the Workers' Union Contained as many as 24 demands, most of which were already covered by the tripartite settlement, Reference could not have been made in respect of those very demands. Moreover, the State Government failed to consider that the Workers' Unions was not representing the majority of workers' and could not have given notice in view of Section 19(7)6 of the Act. There was non-application of mind by the state Government in making the reference. In spite of the judgment of the High Court no opportunity was granted to the appellant to place its case before the State Government. The order of the State Government making reference could not be '9-E. Registration of Union-( I) On receipt of an application from a Union for registration under. Section 9-0 and on payment of the fee prescribed, the Registrar shall, if, after holding such inquiry as he deems tit he comes to the conclusion that the conditions requisite for registration specified in the said section are satisfied and that the Union is not otherwise disqualified for registration, enter the name of the union in the appropriate register in such form as Section 9-C and issue a certificate of registration in such form as may be prescribed: Provided that- {i) Where two or more Unions fulfilling the conditions necessary for registration under this Act apply for registration in respect of the same unit of an industry, the Union having the largest membership of employees employed in the unit of the industry shall F be registered; and G H (ii) the Registrar shall not register any Union if he is satisfied that application for its registration is not made bona fide in the interest of the workmen but is made in the interest of the employers to the prejudice of the interest of the workmen. (2) Once a union has been registered as a representative union under this Act the registration of the union shall be held valid for a period of two years from the date of its registration and shall continue to hold valid unless the registration is cancelled under Section 9·F of this Act or another union is registered in its place according to Section 9-G of this Act. 619. Period of operation of settlement and awards.-( I )A settlement shall come into operation on such date as is agreed upon by the parties to the dispute, and if no date is agreed upon, on the date on which the memorandum of the settlement is signed by the parties to the dispute. · NATIONAL ENGINEERING INDUS. LTD. v. STATE [D.P. WADHWA, J.) 97 termed as administrative order inasmuch as there was a direction A by the Higlt Court that appellant be heard. The State Government should have brought to the notice of the High Court the reference having already been made when the matter was still pending before the High Court. On the other hand, it was contended by the Workers' Union that: B 1. The tripartite settlement was invalid inasmuch as it was entered into on a Sunday. 2 All the demands raised by the Workers' Union had not been covered in the tripartite settlement and reference could have C been made in respect of those demands. 3. Tripartite settlement was not entered into during the course of conciliation proceedings and, thus, a bar could not have been raised against the reference. In this connection reference be made to Section 18 (I)' of the Act. In support of his submissions, Mr. G.B. Pai, learned counsel for the appellant, said that it was not open to the State Government to invoke its power of reference under Section I 0 of the Act during the pendency of the tripartite settlement dated 4.10.1986 arrived at during the conciliation (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 a period of six months from the date on which the memorandum of settlement is signed by the parties to the dispute,. 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 D E settlement. F (3) ................. . (4) ................. . (5) ................. . (6) ................ . (7) No notice given under sub-section (2) or sub-section (6) shall have effect, unless it is given by a party representing the majority of persons bound by the settlement or award, as the case may be. G 718. Persons on whom settlements and awards are binding.-( I) A settlement arrived at by agreement between the employer and workman otherwise than in the course of conciliation proceeding shall be binding on the parties to the agreement. H 98 SUPREME COURT REPORTS [1999) SUPP. 5 S.C.R. A proceedings. The settlement was binding on the members of the Workers' Union as well under Section 18(3) of the Act who had in fact taken advantage of the benefits under the settlement. It could not be said that any industrial ~ispute existed or was even apprehended at the time the State Government invoked its power under Section, I 0(1) of the Act in making the impugned reference of the alleged dispute between the management and the Workers B 'Union. The State Government lacked jurisdiction in making the reference and that was the question which was not addressed by the High Court . The Industrial Tribunal to whom the reference was made could not have gone into the question of jurisdiction. High Court erred in leaving the issue of settlement being just and fair to be decided by the Industrial Tribunal. c Elaborating Mr. Pai submitted that the impugned reference was destructive of the industrial peace and defeated the very purpose and objective of the Act. Once a conciliation settlement is entered into, there is no scope under the Act for further investigation by an Industrial Tribunal about the justness or fairness again of the settlement and no individual workmen or D even a union representing few workmen not party ro conciliation proceedings could question the validity of settlement during its pendency. This was particularly so in the present case as the charter of demands raised by the Workers' Union was itself claimed by it to be identical to the charter of demands raised by the recognised representative Labour Union. Reference by E the State Government was not only ex facie bad and incompetent but the F (2) Subject to the provisions of sub-section (3), an arbitration award which has become enforceable shall be binding on the parties to the agreement who referred the dispute to arbitration . (3) A settlement arrived at in the course of conciliation proceeding under this Act or an arbitration award in a case where a notification has been issued under sub-section (3A) of Section 10-A or an award of a Labour Court, Tribunal· or National Tribunal which has become enforceable shall be binding on- (a) all parties to the industrial dispute; (b) all other parties summoned to appear in the proceedings as parties to the dispute, unless the Board arbitrator, Labour Court, Tribunal or National Tribunal, as the case G may be, records the opinion that they were so summoned without proper cause; (c) where a party referred to in clause (a) or clause (b) is an employer, his heirs, successors or assigns in respect of the establishment to which the dispute relat~~; (d) where.a party refe,r:re,~.to in cla~~~.(a) o,r- c.lause (b) is composed .ofw~rkmen, all persons who .were employed in the establishment or part of the establishment, as the 'H case may .be :to which the di~put~ ie1ates on'the' d~te:ort1ie dispute and 1111 persons who subsequently becoille em"pi~yed. i~· that e~t~bii~hme~t or part'. ,., ,, . ".. . ,. - c'. NATIONAL ENGINEERING INDUS. LTD. v. STATE (D.P. WADHWA. J.] 99 demands in respect of which the reference was made had already been settled A during the course of conciliation proceedings by way of the tripartite settlement between the recognised representative Labour Union and the Staff Union. This settlement was binding on all the workers of the appellant. The State Government before making the reference did not examine whether there was a genuine dispute between the workmen and the management. The State B Government was under a legal obligation to see that the reference was not opposed to any other provision of the Act . The State Government by making the reference dated March 17, 1989 rendered ineffective and inoperative the directions issued by the High Court by its order dated March 23, 1989 to give an opportunity to the appellant of hearing before taking a decision as to whether or not any reference should be made at the instance of the Workers' c Union. The order of reference was made during the pendency of writ petition by the Workers' Union and only six days before the High Court passed the order. In these circumstances the State Government was not justified in directing the appellant to raise the issue of contravention of the direction of the High Court before the Industrial Tribunal. The State Government should D have recalled its order of reference and heard the appellant before taking final decision to make the reference or not. Mr. Pai further submitted that the conciliation settlement has been equated with an award by various judgments of this Court. A settlement being conciliation settlement was, thus, fully binding on the members of the Workers' Union. The settlement could be challenged on the grounds of fraud, E .. undue influence or it being ma/a fide. There was no such plea raised by the Workers 'Union. Industrial Tribunal could not examine the justness and fairness of the settlement entered into during the conciliation proceedings. As a matter of fact, a perusal of the comparative charter of demands that raised by the Labour Union and the Workers' Union would show that what had been F demanded by the Labour Union on either being the same, similar or identical to the demands raised by the Workers' Union. Rather the Labour Union had raised some additional demands not raised by the Workers' Union. There was total non-application of mind by the State Government in making the reference. Reference was not proper or legal which was made after two and a half years G of the settlement dated October 4, 1986 by the order dated March 17, 1989, By entertaining the reference, Industrial Tribunal would be acting beyond its jurisdiction inasmuch as any aware: or reference would be directly and substantially against the conciliation settlement which is binding on all the workmen. The High Court failed to consider that the very purpose of creating a machinery under the Act is for establishing industrial peace and harmony . H .. 100 SUPREME COURT REPORTS (1999] SUPP. S S.C.R. A It is in consonance with the said aim and object of the Act that the settlement arrived at in between the parties during the course of conciliation proceedings are kept at the highest pedestal and the courts have been consistently taking a view that when a particular charter of demands is decided by means of conciliation proceedings then the same would not be allowed to be satisfied on any ground whatsoever including the ground of conflict between the B various unions. High Court was not correct in observing that disputed questions of fact were involved in the present ca.se. There are no disputed questions of fact because both the charter of demands raised by the Labour Union and that raised by the W or\