# TRANSPORT CORPORATION ETC v. KSRTC STAFF AND WORKERS' FEDERATION AND ANR. ETC

- **Citation:** [1999] 1 S.C.R. 733
- **Court:** Supreme Court of India
- **Decided:** 1999-02-18
- **Case number:** Civil Appeal Nos. 928-29 of 1999
- **Bench:** S.B. Majmudar, U.C. Banerjee
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/transport-corporation-etc-v-ksrtc-staff-and-workers-federation-and-anr-etc-16571
- **Pages:** 27

## Headnote

Labour Laws-Industrial Disputes Act 1947, ss. 2(p), 18(I), 19(2)-- c
Road Transport Corporation Act 1950, ss. 3, 34 and, 45(2)(C)-Respondent
Federation elected as recognised union and sole baTgaining agenHn a settlement with Federation Appellant Corporation agreeing to deduct subscription
of members of unions affiliated to Federation from their wages-System
known as Pay Roll Check Off Facility-Settlement coterminus with 1:ecognition
accorded to Federation-Recognition expiring in July 1996 but no fresh D
referendum held-Meanwhile for a different set of demands concerning service
conditions of employees Memorandum of Understanding (MOU) entered into
between Corporation and Federation-State Government while approving
MOU by memo of September 10, 1993 subject to condition that Corporation
withdraw the Pay Roll Check Off facility-Accordingly, Corporation by E
separate order withdrawing facility-High Court allowing petition of Federation challenging both orders-Held, Government memo was ultra vires and
uncalled for; MOU had nothing to do with Pay Roll Check Off facility already
made available by binding settlement holding the field-Further held, earlier
settlement continued till fresh settlement was arrived at; Corporation's order
was violative of S. 19(2) of the ID Act.
F
The appellant Corporation, formed under s. 3 of the Road Transp~
Corporation Act, 1950 entered into a Memorandum of Settlement on July
28, 1988 with the respondent Federation, which was duly elected as the
recognised union of the workers and their sole bargaining agenL Under
the settlement it was agreed that the Corporation shall deduct the sub· G
scription of the members of the unions affiliated to the respondent federa·
tion from their wages on obtaining individual authorisations. This was
known as the Pay Roll Check Off facility. The settlement was agreed to be
followed till the recognition accorded to the Federation lasted or until both
parties terminated the terms by mutual consent earlier.
H
733
734
SUPREME COURT REPORTS
[1999] 1 S.C.R.
A
The respondent Federation continued to be the recognised Union till
"
July 16, 1996 but no referendum was held thereafter. Meanwhile on May
10, 1993 consequent upon a charter of demands concerning the service
conditions of the employees, a Memorandum of Understanding (MOU)
was reached between the Corporation and the Federation. By its memo
B
dated September 10, 1993, the state government accorded its approval to
the MOU subject to the condition that the Corporation should not take
the responsibility of collecting monthly subscriptions from employees on
behalf of the Federation. Accordingly on September 21, 1993 the Corpora-
~
ti on by a notification withdrew the Pay Roll Check off facility.
c
The respondent Federation challenged both the orders by a writ
petition which was allowed by a Single Judge of the Karnataka High Court.
A Division Bench of the High Court dismissed the Corporation's appeal.
Before this Court it was contended on behalf of the appellant CorD
poration that with the recognition of the Federation having expired in 1996,
the settlement of 1988 could not survive thereafter; that on account of later
settlements and the State Government directing the withdrawal of the Pay
Roll Check OIT facility, the earlier right following from the settlement of
1988 did not survive. For the Federation, it was pointed out that till the
agreement of 1988 was legally terminated as required by s. 19(2) of the
E Industrial Disputes Act, 1947 (ID Act) it remained binding on the Corporation. Moreover, till a fresh settlement on the topic was entered into,
the binding effect of the 1988 settlement would not come to an end.
Dismissing the appeals, this Court
F
HELD : 1.1. The Government order dated September 10, 1993 was
neither legal nor valid and was totally uncalled for. The Memorandum of
..
Understanding dated May 10, 1993 had nothing to do with the Pay Roll
Check Off facility already made available to the Union and was holding

## Text

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'
MANAGEMENT OF KARNATAKA STATE ROAD
A
TRANSPORT CORPORATION ETC.
v.
KSRTC STAFF AND WORKERS' FEDERATION
AND ANR. ETC.
B
FEBRUARY 18, 1999
[S.B. MAJMUDAR AND U.C. BANERJEE, JJ.)
Labour Laws-Industrial Disputes Act 1947, ss. 2(p), 18(I), 19(2)-- c
Road Transport Corporation Act 1950, ss. 3, 34 and, 45(2)(C)-Respondent
Federation elected as recognised union and sole baTgaining agenHn a settlement with Federation Appellant Corporation agreeing to deduct subscription
of members of unions affiliated to Federation from their wages-System
known as Pay Roll Check Off Facility-Settlement coterminus with 1:ecognition
accorded to Federation-Recognition expiring in July 1996 but no fresh D
referendum held-Meanwhile for a different set of demands concerning service
conditions of employees Memorandum of Understanding (MOU) entered into
between Corporation and Federation-State Government while approving
MOU by memo of September 10, 1993 subject to condition that Corporation
withdraw the Pay Roll Check Off facility-Accordingly, Corporation by E
separate order withdrawing facility-High Court allowing petition of Federation challenging both orders-Held, Government memo was ultra vires and
uncalled for; MOU had nothing to do with Pay Roll Check Off facility already
made available by binding settlement holding the field-Further held, earlier
settlement continued till fresh settlement was arrived at; Corporation's order
was violative of S. 19(2) of the ID Act.
F
The appellant Corporation, formed under s. 3 of the Road Transp~
Corporation Act, 1950 entered into a Memorandum of Settlement on July
28, 1988 with the respondent Federation, which was duly elected as the
recognised union of the workers and their sole bargaining agenL Under
the settlement it was agreed that the Corporation shall deduct the sub· G
scription of the members of the unions affiliated to the respondent federa·
tion from their wages on obtaining individual authorisations. This was
known as the Pay Roll Check Off facility. The settlement was agreed to be
followed till the recognition accorded to the Federation lasted or until both
parties terminated the terms by mutual consent earlier.
H
733
734
SUPREME COURT REPORTS
[1999] 1 S.C.R.
A
The respondent Federation continued to be the recognised Union till
"
July 16, 1996 but no referendum was held thereafter. Meanwhile on May
10, 1993 consequent upon a charter of demands concerning the service
conditions of the employees, a Memorandum of Understanding (MOU)
was reached between the Corporation and the Federation. By its memo
B
dated September 10, 1993, the state government accorded its approval to
the MOU subject to the condition that the Corporation should not take
the responsibility of collecting monthly subscriptions from employees on
behalf of the Federation. Accordingly on September 21, 1993 the Corpora-
~
ti on by a notification withdrew the Pay Roll Check off facility.
c
The respondent Federation challenged both the orders by a writ
petition which was allowed by a Single Judge of the Karnataka High Court.
A Division Bench of the High Court dismissed the Corporation's appeal.
Before this Court it was contended on behalf of the appellant CorD
poration that with the recognition of the Federation having expired in 1996,
the settlement of 1988 could not survive thereafter; that on account of later
settlements and the State Government directing the withdrawal of the Pay
Roll Check OIT facility, the earlier right following from the settlement of
1988 did not survive. For the Federation, it was pointed out that till the
agreement of 1988 was legally terminated as required by s. 19(2) of the
E Industrial Disputes Act, 1947 (ID Act) it remained binding on the Corporation. Moreover, till a fresh settlement on the topic was entered into,
the binding effect of the 1988 settlement would not come to an end.
Dismissing the appeals, this Court
F
HELD : 1.1. The Government order dated September 10, 1993 was
neither legal nor valid and was totally uncalled for. The Memorandum of
..
Understanding dated May 10, 1993 had nothing to do with the Pay Roll
Check Off facility already made available to the Union and was holding
the field by the time of the Government Order. [750-D]
G
'
1.2. The unilateral termination of the settlement by the Corporation
was ultra vires the powers of the Corporation under s. 19(2) ID Act. The
recognition accorded to the respondent Federation continued all
~·
throughout and by the time of the notification dated September 21, 1993
the period had never ended. Similarly, there was no earlier termination of
H the settlement by mutual consent. Till either of thes~ eventualities oc·
MANAGEMENT OF KSRTC v. KSRTCSTAFF & WORKERS FEDERATION [S.B. MAJMUDAR. J.)
735
1
curred, there was no occasion for the Corporation to terminate the settleA
ment under s. 19(2) ID Act. [752-F; 753-A-B]
1.3. The Corporation's notification of September 21, 1993 was violative of the mandatory req•1irement of s.19(2) ID Act. Till any new settlement on the question of grant of Pay Roll Check-off facility was substituted
by parties, the legally binding effect of the earlier settlement of 1988 would B
continue to operate and the Corporation would be bound to confer the
facility to the Union. [754-E-F]
The Life Insurance Co1poration of India v. D.J. Bahadur, [1981) 1 SCR
1083, relied upon.
c
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 928-29
of 1999 Etc.
From the Judgment and Order dated 10.6.97 of the Kamataka High
Court in W.A. Nos. 8635 and 8491 of 1996.
D
. >
G.L. Sanghi, K.R. Nagaraja, K.K. Tyagi, (S. Vijay Shankar) Adv .
General, K. Kiran, N. Ganpathy, M.C. Narshiman, Sanjay Parikh and
Abinash Kr. Misra for the appearing parties.
The Judgment of the Court was delivered by
E
S.B. MAJMUDAR, J. Leave granted in these special leave petitions
being S.L.P. (c) Nos. 19982-19983of1997 and S.L.P. (C) Nos. 22370-22371
of 1997. By consent of learned counsel of the contesting parties, the appeals
were heard finally and are being disposed of by this. common judgment.
The Management of Kamataka State Road Transport Corporation has
F
filed the first two appeals arising out of Special Leave Petition Nos. 19982
and 19983 of 1997 being aggrieved by the common judgment & order
rendered by the Division Bench of the High Court of Karnataka in Writ
Appeal Nos. 8635 and 8491 of 1996, while the other two appeals arising
out of Special Leave Petition Nos. 22370 and 22371 of 1997 are filed by the
G
State of Kamataka, also aggrieved by the aforesaid common judgment &
order in the very same two writ appeals. The appellants have the common
...
cause of complaint against the impugned judgment of the Division Bench,
while the respondent KSRTC Staff and Workers' Federation, which is the
common respondent in all these appeals, is the only contesting respondent,
being the originat writ petitioner whose writ petition was allowed by the H
736
SUPREME COURT REPORTS
[1999] 1 S.C.R.
A learned Single Judge of the High Court and which judgment came to be
,
· confirmed by the impugned judgment of the Division Bench. We shall refer
I
-
· to the appellant - Management of Karnataka State Road Transport Corporation, the original Respondent No. 1 in the writ petition, as the
'Corporation', the appellant State of Karnataka in other two appeals, being
B original Respondent No. 2 in the writ petition as the 'State', while the
contesting Union, Respondent No.1 in these appeals in writ petition as the
'Union' for the sake of convenience in the latter part of this judgment. The
qu\!stion involved in these appeals in as to whether the order passed by the
State on 10th September, 1993 and the consequential order passed by the
Corporation on 21st September, 1993 were legal and valid. Both these
C orders came to be set aside by the learned Single Judge in the writ petition
filed by the l,Jnion, and as noted above, the said order of the learned Single
Judge came to be confirmed by the Division Bench in the impugned
common judgment. The order dated 10th September 1993 of the State
instructing the Corporation to withdraw the Pay Roll Check-off Facility
D given to the Union and the consequential order dated 21st September, 1993
issued by the Corporation withdrawing this facility came to be challenged
on various grounds in the writ petition which, as noted above, succeeded
in the hierarchy of proceedings before the Karnataka High Court. The
short question therefore which falls for our consideration is whether the
impugned orders of the State and the consequential order issued by the
E Corporation could be sustained in Jaw?
F
In order to appreciate the rival contentions centering round the
aforesaid controversy between the parties, it is necessary to note a few
relevant facts leading. to these proceedings. .
INTRODUCTORY FACTS:
The Corporation is formed under Section 3 of the Road Transport
Corporation Act, 1950 (for short the 'Corporation Act'), for providing
efficient, economical and properly co-ordinated transport services to the
G travelling public and the KSRTC has framed Service Regulations by deriving powers under Section 45(2) ( c) of the Corporation Act. At the relevant
time the Union was the sole bargaining agent for the employees of the
Corporation. On 11th December, 1987 a referendum was held to choose
the collective bargaining agent on behalf of the employees of the CorporaH tion. The Union was elected as the recognised agent with 53% of the votes
>
MANAGEMENT OF KSRTC '· KSRTC STAFF & WORKERS FEDERATION [S.B. MAJMUDAR J.]
737
polled by way of official memorandum dated 24th December, 1987. The A
Corporation thus granted recognition to the Union as sole bargaining
agent. Consequent on choosing the Union as the collective bargaining
agent, a Memorandum of Settlement under Section 18(1) read with Section
2(p) of the Industrial Disputes Act, 1947 (hereinafter referred to as the~!D
Act') was entered into by the Corporation and the Union on 28th July,
1988. Under this settlement it was agreed between the parties that the
Corporation shall deduct the subscription of the members of the Unions
affiliated to the respondent Federation from their wages on obtaining
individual authorisations. The said settlement was agreed to be followed
till the recognition accorded to the Federation lasted or until both the
parties terminated the terms by mutual consent earlier. This system was
popularly known as Pay Roll Check off Facility. A Memoradum of Settlement regarding the wages payable to the employees was also entered into
on 1st January, 1988 between the Corporation and the Union. The settlement was for a period of four years commencing from 1st January, 1988
B
c
till 31st December, 1991. As the recognition given to the Federation had D
come to an end, election had to be conducted again to choose the sole
bargaining agent by way of referendum. The Union emerged successful as
the sole bargaining agent and was chosen as such. The Corporation by its
order dated 16th July, 1992 accorded recognition to the Union as the sole
bargaining agent as per the Memorandum. It is not in dispute between the
parties that as four years' period expired with effect from 16th July, 1996
a fresh referendum had to be held for finding out as to whether the Union
still commanded majority membership of workmen so as to be re-designated as a recognised Union. But the said referendum has still not been held
because of writ petitions pending in the High Court and the Stay granted
therein, with which we are not concerned in the present proceedings.
E
F
During the time, admittedly, the Union was functioning as a recognised Union, it submitted a charter of demands on various disputed items
concerning service conditions of the employees. Consequently, negotiations
were held between the Corporation and the Union and on 10th May, 1993
a Memorandum of Understanding was reached. The same was subject to G
approval by the Board of Directors and the State Government. The Board
of Directors of the Corporation accepted the Memorandum and thereafter
it was submitted to the Government for its approval. The State by its order
dated 10th September 1993, accorded approval to the Memorandum of
Understanding suggesting certain alterations to the service conditions subH
738
SUPREME COURT REPORTS
[1999] 1 S.C.R.
A ject to other terms and conditions. One of such conditions was that the
Management of the Corporation would not take up the responsibility of
collecting donations or monthly subscriptiom from the employees on behalf of the recognised Federation or Union of employees. It was pursuant
to the aforesaid Government Order that the. Corporation issued a NotificaB tion dated 21st September 1993 withdrawing the Pay Roll Check off
Facility. As noted earlier, the aforesaid G.O. issued by the State and the
consequent Notification issued by the Corporation were brought in chal-
+
lenge in the writ petition by the Union. The said writ petition was filed on
-+
21st September 1993. The learned Single Judge, who heard the writ petition
having considered the rival contentions of the parties took the view that
C there was no occasion for the Government to issue such a direction under
Section 34 of the Corporation Act on 10th September 1993. Hence, the
consequential Notification issued by the Corporation could not survive. It
was also held that the said Notification of the Corporation was violative of
the provisions of Section 19(2) of the ID Act. By his order dated 25th July,
D 1996 the learned Single Judge held that the settlement dated 28th July, 1988
occupied the field as authoritative settlement under Section 18(1) of the
ID Act and was binding on the parties. It was also held that the exercise
of power by the State under Section 34 was not proper. Consequently, the
order of the State dated 10th September 1993 and the subsequent Notification by the Corporation withdrawing Pay Roll Check off Facility on 21st
E September 1993 were held to be invalid. The writ petition was accordingly
allowed. As noted earlier, the aforesaid order of the learned Single Judge
was made the subject matter of two separate appeals, one by the State and
another by the Corporation and both these appeals were dismissed by the
Division Bench by the impugned judgment and order and that is how the
F Corporation and the State are before us in these appeals on grant of
Special Leave to appeal under Article 136 of the Constitution of India.
RIVAL CONTENTIONS :
Shri G .L.Sanghi, learned senior counsel appearing for the CorporaG tion, vehemently contended that the settlement of 28th July, 1988 could not
survive after 16th July, 1996 when the Union ceased to be a recognised
Union of employees and till a new bargaining agent emerged by way of
recognition, the respondent Union could not rely upon the terms of the
earlier settlement of 28th July, 1988. It was next contended that in any case
H the said settlement had ceased to operate and was validly terminated by

+
740
SUPREME COURT REPORTS
[1999] 1 S.C.R.
A hand, submitted that once there is a binding settlement regarding the Pay
Roll Check off Facility holding the field between the parties from 28th July
1988, till the said settlement was legally terminated as required by Section
;
19(2) of the ID Act, it remains binding on the Corporation. That whether
the Corporation subsequently got trifurcated or not becomes irrelevant as
B
even to the successors of the Corporation the s~ttlement would be binding.
It was next submitted that the Notification of the Corporation dated 21st
September 1993 cannot be treated to be a notice as contemplated by
Section 19(2) of the ID Act. Even assuming that it was such a notice, the
+
binding effect of the settlement of 1988 would not come to an end automatically till a fresh settlement on the topic is substituted by negotiations
c between the parties, as was clearly laid down in the decision of three Judge
Bench of this Court in The Life Insurance Corporation of India v. D.J.
Bahadur & Ors., [1981) 1 SCR 1083. It' was then submitted that the
Memorandum of Understanding dated 10th May, 1993 was in connection
with entirely different demands put forward by the Union for consideration
D
of the Corpqr~ion. That it had nothing to do with the Pay Roll Check off
Facility which was already governed by a binding Settlement of 28th July,
1988. Consequently, there was no occasion for the State to pass the
impugned order dated 10th Sept. 1993 in contlection with withdrawal of
,,
the said facility by the Corporation. It was also contended that in any case
the said order could not be covered by Section 34 of the Corporation Act.
E
That the State had no power to direct the Corporation to commit breach
of statutory provisions of Section. 19(2) of the ID Act. Nor could it issue
any general directions under Section. 34 in connection with those industrial
matters which were already covered by binding settlements or awards
under the ID Act. That such general directions, if any, could be issued by
the State for consideration of the Corporation only on industrial matters
F which were not covered by any such binding agreements or awards under
the ID Act and when the field was open for negotiations between the
employees' Union and the Corporation wherein the parties could take
~
independent decisions in the first instance without violating any of the
provisions of the ID Act. It was, therefore, contended that both the
Government Order dated 10th September 1993 and Notification dated 21st
G September 1993 were rightly set aside by the learned Single Judge and that
decision was rightly confirmed by the Division Bench of the High Court.
It was also submitted that the Union had not ceased to be the sole
bargaining agent, as up to 16th July 1996, it was already operating as a
Union recognised by the Corporation itself and thereafter it was not the
H
case of the Corporation that at any time by fresh referendum it had lost
the majority of the membership of the workers of the Corporation nor was
MANAGEMENT OF KSRTC '· KSRTC STAFF & WORKERS FEDERATION [S.B. MAJ MUD AR, l. J
7 41
it replaced by any other recognised Union. That the question of locus. A
standi of the Union to maintain the proceedings was neither raised before
the learned Single Judge when he passed the impugned judgment nor
before the Division Bench which confirmed the decision of the learned
Single Judge.
In the light of the aforesaid rival contentions the following points B
arise for our determination:
1. Whether the Union has locus standi to maintain the writ petition
as well as the present proceedings on behalf of the workmen;
2. If it has, whether the Government Order dated 10th September C
1993 was legal and valid and/or was uncalled for;
3. Whether the impugned Notification issued by the Corporation on
21st September 1993 was legal and vali.d; and
4. What final order?
We shall deal with these points seriatim.
Point No.l:
So far as the locus standi of the Union in the present proceedings is
concerned, it must be kept in view that the Corporation itself by its order
dated 24th December, 1987 granted recognition to the Union as the sole
bargaining agent for its members. It was noted by office memorandum of
D
E
F
the Corporation dated 24th December 1987 that the Federation having
secured 53.04% of the votes polled at the Corporation level in the referendum held on 11th December 1987, the Corporation was pleased to accord
recognition to the respondent Federation as sole bargaining agent at the
Corporation level. However, this was subject to the conditions stipulated
under Notification dated 30th April, 1987 which prescribed four years'
period from the date of such confirment of right of collective bargaining G
with the employer by the Union concerned. It is also not in dispute between
the parties that even in the subsequent referendum, the respondent
Federation/Union secured 61.07% of votes polled at the Corporation level
and the Corporation by its Office Memorandum dated 16th July, 1992
continued recognition t(l the Union as sole bargaining agent subject to the H
742
SUPREME COURT REPORTS
[1999] 1 S.C.R.
A conditions stipulated in the earlier Notification dated 3rd December 1991.
It is therefore, not in dispute between the parties that till 16th July, 1996
respondent Federation/Union remained a recognised Union. We fai.l to
appreciate how the said Union can not challenge the Government Order
dated 10th September 1993 and the Consequent Notification issued by the
B Corporation on 21st September 1993. On both these occasions the respondent Union was admittedly a recognised Union of the employees and had
got the benefit of Pay Roll Check-cff Facility under the settlement of 28th
July 1988. It is also interesting to note that before the learned Single Judge
only three questions were posed for consideration in the light of the
C contentions of rival parties. They were as under :
D
E
"(i) Whether this petition under Article 226 of the Constitution
of India is not maintainable in view of the question in controversy relates to the breach of the Settlement?
(ii) Whether the Government has lawful authority to interfere
with the Settlement validly made between the petitioner and
the Corporation by issuing directions under Section 34 of the
Act?
(iii) Whether Annexure-A is a direction under Section 34 of the
Act?
The question of locus standi of the writ petitioner - the respondent
Union, was not even brought in issue. But even that apart, in appeals filed by
the State and the Corporation before the Division Bench which came to be
decided by the impugned common judgment dated 10th June, 1997, no such
F contention appears to have been canvassed. It is also pertinent to note that
it is not the case of the Corporation that by any fresh referendum the
respondent Federation has lost its recognition as a sole bargaining agent on
account of its membership getting depleted and any other rival Union has
emerged as a recognised Union having mustered sufficiently larger memG bership. Consequently, the first point for determination as canvassed for our
consideration by the learned counsel for the appellants is found to be totally
devoid of any substance and stands rejected. To say the least, such objection
appears to have been waived by both the appellants before the learned
Single Judge as well as before the Division Bench and, therefore, also cannot
be countenanced. This point for determination, therefore, is answered in
H affirmafr1e in favour of the respondent Union and against the appellants.
+
MANAGEMENT OF KSRfC '· KSRTC STAFF & WORKERS FEDERATION (S.B. MAJMUDAR, J.]
743
..
Point No. 2:
A
That takes us to point no. 2. So far as this point is concerned, it has
to be kept in view that the Pay Roll Check-off Facility was made available
to the respondent-Union by a binding settlement between the parties dated
28th July, 1988. This settlement was current when the Memorandum of
Understanding dated 10th May, 1993 came to be entered into between the B
'
respondent Union and the Corporation. The said Memorandum of Understanding dealt with various demands including revision of pay scales. They
+
are listed at item Nos. 1 to 23. In none of these demands, there is any
whisper about the then existing Pay Roll Check-offFacility covered by the
settlement of 28th July. 1988. Paragraph 24 of the Memorandum on which c
strong reliance was placed by learned senior counsel Shri Sanghi for Corporation, deserves to be noted in extenso. It is, therefore, extracted as under ;
"24. SAVINGS:
..
Benefits already granted under earlier Settlements excepting D
those covered under this Settlement, facilities continuing by way
).
of conve.ntions and or practice to be continued in respect of the
..
employees who are in the services of the Corporation as on the
date of signing of this Settlement.
An understanding has been reached on the above mentioned E
points in anticipation of approval of the Board of Directors and
the State Government. However, the issue regarding free duty
facility to R. Federation/R. Unions is left to the decision of the
State Govnment."
The caption of paragraph 24 clearly indicates that it provides a saving
F
~
clause. Meaning thereby, it seeks to continue the benefits and facilities
f
which might have been available to the workmen and their Union under
the earlier settlements. It is obvious that the demands for which Memorandum of Understanding was reached between the parties were pertaining to
the workmen for whom they were raised by their Union and the benefits
G
of the understanding about these demands were to be made available to
the workmen concerned. It has to be kept in view that the earlier settlement
:=:
of 1988 between the parties regarding facility of Pay Roll Check-off was
..
not a benefit to the workmen but was a facility given to the Union to
directly get its membership contribution from the member-workers' wages
by their consent. This facility imposed no additional burden on the H
~
-,
+
744
SUPREME COURT REPORTS
[1999] 1 S.C.R.
I
A workmen nor gave any additional benefit to them but grant of this facility
i...
only resulted into an easy method made available to the Union to collect
•
its subscription from its members through the intervention of the Corporation. To illustrate the point, if a member-employee was to get hundred
rupees by way of monthly wages and if he agreed with the Corporation that
B out of hundred rupees payable to him, five rupees may be deducted at
source and paid over to his Union for discharging his obligation to pay
rmonthly membership fee, the Corporation would not suffer any additional
financial burden thereby as it had the obligation to pay full hundred rupees
-+
by way of wages to the workmen having !ii.ken work from him for the
c
month. Similarly, the wc.rkmen also would not get any benefit thereby as
he had earned rupees hundred in full and on his own request five rupees
were to go directly to the Union by way of membership fee which otherwise
he would have been required to pay from his wages after receiving Rs.
100/-. Therefore, the scheme of pay Roll Check-off Facility conferred a
facility to the Union of workmen without conferring any extra benefit to
D the workmen or imposing any greater financial burden on the Corporation.
In the light of the aforesaid scheme, the Pay Roll Check-off Facility was
made available to the respondent Union pursuant to the binding settlement
of 28th July, 1988 by way of a tripartite agreement amongst the Union,
"
,..
worker Member concerned and the Corporation. We have to see as to what
E is the scope and ambit of aforesaid clause 24 of the Memorandum of
Understanding dated 10th May, 1993 vis-a-vis this scheme. The first part
of clause 24 deals with benefits already granted under earlier settlements
but excepting those covered by the settlement at hand namely, the
Memorandum of Understanding. These benefits wete to be continued for
F the employees who were in the service of the Corporation on the date of
signing of the settlement. They were obviously benefits already made
available to the workmen under any earlier settlements. Pay Roll Check-off
facility, as noted earlier, cannot be considered to be a benefit available to
"
~
the workmen. At the most, it will be a facility to the Union to get an
G
ensured method of securing mem~ership fees from its members on regular
basis. The first part of paragraph 24 states that facilities continuing by way
,.
of conventions and or practice will be continued. It is obvious that such
facilities may include any of the then available facilities to the Union or
even to workmen. However, facility given to the Union of getting benefit
.>
of the scheme of Pay Roll Check-off is obviously not a facility available to
•
H workmen. It is available only to the Union, that too under a binding
+
MANAGEMENT OF KSRTC '· KSRTC STAFF & WORKERS FEDERATION [S.B. MAJMUDAR. J.]
7 45
settlement and not by way of convention or practice. Such a facility will not A
be covered by latter part of first paragraph of clause 24 as the facilities
contemplated therein refer to only those which were continuing by way of
conventions and or practice. Hence, this facility was not contemplated even
by the first part of paragraph 24 of the Memorandum of Understanding.
If that is so, the second part of paragraph 24 also would be out of picture
so far as Pay Roll Check-off facility available to respondent Union under
the agreement of 28th July, 1988 was concerned. The second part of
paragraph 24 provides for an understanding which had been reached on
the earlier mentioned points in anticipation of approval of the Board of
Directors or the State Government. It is difficult to appreciate how it could
be said that any understanding was reached on Pay Roll Check-off Facility
covered by any of the points mentioned in the Memorandum of Understanding. Understanding reached on the points mentioned in second part
of paragraph 24 naturally referred to the points mentioned from paragraphs 1 to 23 of the Memorandum of Understanding. It cannot refer to
B
c
the saving clause mentioned in the very same paragraph 24. We, therefore, D
cannot accept the contention of learned senior counsel Shri Sanghi that the
phrase "the above mentioned points" as referred to in second part of
paragraph 24 of the Memorandum of Understanding would also cover the
first part of paragraph 24. But even that apart, assuming that what Shri Sanghi
contends is right, even then the first part of paragraph 24 does not cover any
understanding regarding the Pay Roll Check-off Facility given to the Union
E
by settlement as seen earlier. Thus, neither first part of paragraph 24 nor its
second part can apply to the question of Pay Roll Check-off Facility. For all
these reasons, therefore, reliance placed on paragraph 24 of the Memorandum
of Understanding dated 10th May, 1993 by Shri Sanghi, learned senior counsel
for the Corporation, for subjecting the earlier granted Pay Roll Check-off
facility to the future approval of the State is not of any avail.
F
We, accordingly hold that paragraph 24 of the Memorandum of
Understanding did not touch or cover in its sweep the Pay Roll Check-off
Facility available to the respondent Union as per the binding settlement of
28th July, 1988. If that is so, there was no occasion for the State in the light G
of the aforesaid Memorandum of Understanding to pass the impugned
Government Order dated 10th September, 1993, on a wrong assumption
that it was called upon to make any observations or convey its decision
whether it approved or did not approve the grant of Pay Roll Check-off
Facility to the respondent Union. The proceedings of the Government of H
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(1999) 1 S.C.R.
A Karnataka which are at page 110 of Vol. 1 of the paper book clearly
mentioned as its subject, List of demands submitted by KSRTC Staff &
Workers Federation and also referred to the D.O. Letter dated 13th July,
1993 from the Chairman & Managing Director of the Corporation. The
Preamble of the impugned G.O. issued by State recites that the Memorandum of Understanding arrived at between the Chairman 8{. Managing
B Director of the Corporation, and the Management of Corporation and
KSRTC Staff & Workers Federation had been signed on 10th May, 1993
in anticipation of approval of the Board of Directors of the Corporation
and the Government. It is in that light that the scope of the Government
Order. dated 10th September 1993 is to be appreciated. It states that after
C examining in detail the proposal of the Corporation, the Government had
accorded approval to the understanding between the parties with modifications and subject to the conditions mentioned in the said order. It becomes
at once clear that even the State of Karnataka thought that it was called
. upon to consider whether to approve or not to approve the settlement on
D various demands as proposed in the Memorandum of Understanding dated
10th May, 1993. Twenty two such items are listed in the Government Order
dated 10th Sept. 1993. Nowhere we find a whisper about the Pay Roll
Check-off Facility which was already made available to the respondent
Union by the binding settlement of 28th July, 1988. However, when we
come to conditions mentioned in the impugned Government Order dated
E 10th September 1993 we find Condition No.2 to the effect that the Management shall not take the responsibility of collecting donations or monthly
subscriptions from the employees on behalf of the recognised Federation
or Unions. Condition No.2 as mentioned in the impugned Govt. Order
dated 10th Sept. 1993, to say the least, was clearly uncalled for and dehors
F the very scheme and ambit of the Memorandum, as noted earlier, had
nothing to do with the Pay Roll Check-off Facility already made available
to the Union by a binding settlement between the Corporation and the
Union and it was holding the field at least by the time the order dated 10th
Sept. 1993 saw the light of the day. It must, therefore, be held that
Condition No.2 as imposed in the impugned Govt. Memo dated 10th Sept.
G 1993 was totally ultra vires and uncalled for and that the State had no
occasion to lay down such a condition in connection with existing binding
Pay Roll Check- off Facility. Onee this conclusion is reached, it becomes
obvious that the aforesaid condition contained in the impugned Memo
must be held to be null and void knd inoperative at law. Consequently, it
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MANAGEMENT OF KSRTC '· KSRTC STAFF & WORKERS FEDERATION [S.B. MAJMUDAR, J.)
7 4 7
is not necessary for us to examine the wider question canvassed by learned A
Advocate General for the State of Karnataka whether the State could issue
such general directions under Section 34 of the Corporation Act. The
decision of the learned Single Judge as confirmed by the Division Bench
can be sustained on the short ground that the Goverment Order dated 10th
September 1993 laying down the aforesaid impugned Condition No. 2 in
connection with Pay Roll Check-off Facility was ex-facie uncalled for and,
therefore, the said Government Memorandum in so far as it referred to
Condition No. 2 was not required to be acted upon by the Corporation.
We keep the wider question about the applicability of Section 34 open for
consideration in an appropriate case. We hold that it was not necessary for
the learned Single Judge to go into this wider question for voiding the
Government Memorandum dated 10th September 1993 by interpreting
section 34 of the Corporation Act.
Before parting with the discussion on this point, we may briefly refer
B
c
to written submissions filed on behalf of the State of Karnataka and the D
Corporation.
We may consider in the first instance the written submissions filed
on behalf of the State of Karnataka along with the Cabinet Note in
connection with the charter of demands submitted by KSRTC Staff and
Workers Federation. So far as Pay Roll Check-off Facility is concerned, it E
has to be kept in view that Free Duty Check-off Facility remained in force
till 1989 as stated in paragraph 4 of the written submissions. Thereafter,
admittedly Free Duty check-off Facility was substituted by settlement dated
28th July, 1988 where-under the then existing Free Duty Check-off Facility
was substituted by a scheme of direct deduction from the employees' wages
F
the amount of subscription for direct payment to their union, which became
Pay Roll Check-off Facility in place of duty free facility. It is this Pay Roll
Check-off Facility which remains binding as a settlement under the ID Act
between the parties. As admitted in paragraph 7 of the written submissions,
the said facility which became a part of the statutory settlement of July G
1989 was approved by the State Government However, it is not correct to
submit as mentioned in paragraph 9 of the written submissions, that the
Memorandum of Understanding dated 10th May, 1993, specially paragraph
24 dealing with Free Duty Facility covered Check-off Facility which was an
off shoot of Free Duty Facility. Free Duty facility had ceased to have any
connection with the subsequent Pay Roll Check-off Facility as per the H
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SUPREME COURT REPORTS
[1999] 1 S.C.R.
A aforesaid settlement. Subsequently, paragraph 24 of the Memorandum of
Understanding referred to different type of facility wherein Union's office
bearers were to be given Free Duty Off for conducting their Union's
activities which has nothing to do with Pay Roll Check-off Facility. Consequently, the rest of the contentions in the written submissions regarding
B the question of Pay Roll Check-off Facility being placed for consideration
of the Government would not survive. As noted earlier, the Federation's
agreement to discuss demands including Check-off Facility at the Government level would not amount to substitution of the already binding settlement regarding Pay Roll Check-off Facility. Consequently, it cannot be
said, as tried to be submitted on behalf of the State of Karnataka in the
C written submissions, that the Cabinet Note imposing Condition no. 2
regarding not undertaking the responsibility of collecting the monthly
subscription from employees on behalf of the recognised Federation or
Union by the Corporation amounted to substitution of the earlier binding
settlement. At the highest it remained in the realm of a mere suggestion
D for future guidance of the Corporation. It must be held to be beyond the
scope of the demands put forward under the Memorandum of Settlement
for approval of the State Government. It has to be noted that Duty Free
Facility covered by Item No. 24 of the Memorandum of Settlement pertained to giving duty free work for trade union's activities as clearly
E mentioned by Condition No.3 referred to in Cabinet Note itself. Hence,
the written submissions filed on behalf of the State of Karnataka do not
advance its case any further. It is also easy to visualise that in exercise of
powers conferred under Section 34 of the Corporation Act, the State of
Karnataka could not have directed the Corporation to commit breach of
F any binding settlement operative between the parties under Section 18(1)
of the ID Act or to make the Corporation liable for criminal action in this
connection. It has to be noted that under Section 29 of the ID Act, any
party who commits breach of a binding settlement would be liable to be
prosecuted and the punishment may extend even to six months' imprisonment. It is also not possible to agree with the contention canvassed in the
G written submissions that because by way of an interim order of this Court
the parties were directed to arrive at some amicable settlement of the dispute
and which did not fructify, it can be said that the said order of the Government
declining to restore the Check-off facility had put an end to the entire
controversy in the present case. If the Government had approved a modified
H settlement in this connection and if that had resulted into a fresh agreement
, MANAGEMENT OF KSRTC v. KSRTC STAFF & WORKERS FEDERATION (S.B. MAJMUDAR, J.]
7 49
/
between the parties regarding Pay Roll Check-off Facility then it could A
have become a new binding settlement between the parties. But that
eventually had never occ~rred. Hence, the efficacy and binding nature of
the earlier settlement did not get whittled down in the least.