Holding

The agreement was not a settlement within the meaning of Section 2(p) of the Industrial Disputes Act because the union’s office‑bearers lacked authority, and therefore it was not binding under Section 18(1).

Summary

Brooke Bond India Ltd. and its workmen’s unions were involved in a government‑referenced industrial dispute. The Rashtriya Union’s negotiation committee signed a memorandum of settlement on 16 March 1978, which was later filed for an award. The union’s executive committee subsequently resolved to reject the agreement, claiming lack of authority and worker discontent. The key issue was whether the signed memorandum qualified as a “settlement” under Section 2(p) of the Industrial Disputes Act, 1947 and thus binding under Section 18(1). The Supreme Court held that the office‑bearers who signed were not empowered by the union’s executive committee, so no valid settlement existed and the agreement could not bind the union. Consequently, the appeal by the employer was dismissed.

Issues considered

Whether a memorandum of settlement signed by union office‑bearers without explicit executive‑committee authorisation constitutes a ‘settlement’ within the meaning of Section 2(p) of the Industrial Disputes Act, 1947.
Whether compliance with Rule 62(2)(b) and Rule 62(4) of the Industrial Disputes (Bombay) Rules, 1957 is sufficient to render the agreement binding under Section 18(1).
Whether the settlement, if any, is binding on the union and its members.

Legislation cited

Industrial Disputes Act, 1947s. 17(1), s. 18(1), s. 18(3), s. 2(p), s. 38
Industrial Disputes (Bombay) Rules, 1957s. 62(2)(b), s. 62(4)
Industrial Disputes (Central) Rules, 1957s. 58(2)(b)

Subjects

settlementindustrial disputetrade union authorityIndustrial Disputes ActSection 2(p)Section 18Rule 62binding agreementunion executive committee

Judgment

A
29

BROOKE BOND INDIA LTD.

v. B
THE WORKMEN

July 22, 1981

[A.C. GUPTA, R.S. PATHAK, & 0. CHINNAPPA REDDY, JJ.]
• c
Industrial Disputes Act, 1947 Section 2(p), S. Settlement-Meaning of, S.18
( 1), Settlement if binding on "parties to the agreernent''.

Industrial Disputes (Bombay) Rules, 1957, Rule 62 (2) (b), signing of
memorandurn of Settlement-Meaning o.f.
D

Two Trade Unions of Workmen function at appellant's factory. The
State Government made a reference under the Industrial Dispute Act, 1947 for
adjudication of an Industrial Dispute between the appellant and its workmen
regarding their demands.
E
A joint charter of Demands was later submitted by the Unions raising
certain other demands. On behalf of one of the union a negotiation committee
was formed composed of some of the office bearers of that union to participate
in the negotiations for a settlement. Ultimately a tnemorandum of settlement
was signed. The members of the negotiation committee of aforesaid union who F
happened to be office bearers of that union signed the settlement for their union.
The settlement covered the disputes mentioned in the reference and also certain
other disputes between the management and workmen. A joint petition for
passing an award in terms of the settlement was filed before the tribunal.

A few days later the executive committee of the aforesaid Union rejected G
the agreement on the ground that the agreement had given rise to discontent
among a section of the workers whose problems had not been satisfactorily
solved. The question was whether the agreement was a settlement within the
meaning of section 2(p) of the Industrial Disputes Act from which the Union
could not resile. H
30 SUPREME COURT REPORTS [l 982] I S.C.R.

A The Tribunal by its award held that the agreement was not a settlen1ent
within the meaning of section 2{p) 1 of the Act. Hence this appeal by special
leave.

It was argued on benalf of the appellants that as the agreement was signed
B in the manner prescribed by rule 62(2)(b) of the Industrial Disputes (Bombay)
Rules, 1957 and as the requiten1ents of rule 62(4) have been complied with, the
agreement must be accepted as a settlement within the meaning of section 2(p)
of the Industrial Disputes Act, and as such was binding on the Union under
Section 18(1} of the Act.

c Dismissing the appeal,

HELD : 1. In this case it has been found that the office bearers who
signed the agreement were not competent to enter into a settlement with the
company and as such it cannot be said that an agreement was reached between
D the employer and the workmen represented by the Union. [35 E-F)

2. What is binding as a settlement under section 18 (1) of the Industrial
I>isputes Act is an agreement between the employer and workmen and the Tri-
bunal found that there was no agreement between the Management and the
Union. [35 E-Fl
E

Workmen of Mjs Delhi·Cloth & General Mills v. Management of Mis Delhi
Cloth & General Mills [1970) 2 SCR 886 referred to. -

3. The procedure prescribed by either rule 58 of the Central Rules or
F
Rule 62 of the Bombay Rules pre·supposes the existence of a valid settlement.
But neither rule 58 of the Central Rules nor rule 62 of the Bombay Rules con-
tains anything to suggest that any officer of a trade union who is entitled to sign
a settlement reached between the parties inust be deen1ed to have had the
authority to enter into the settlement. Rule ~62 only prescribes the form of
G n1emorandum of settlement and by whom it should be signed and the question
whether the procedure has been complied with will arise only if there is in
existence a valid settlement. [36 F-H]

The Sirsilk Ltd. and others v. Govt. of Andhra Pradesh & another [1964] 2
H
SCR 488 referred to.
BROOKE BOND v. WORKMEN (Gupta, J.) 31

Hindustan Housing Factory Ltd. v. Hindustan Housing Factory Employees' A
Union & Others [1969] Lab. J.C. 1450 approved.

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1757 of
1980.

B
From the judgment and order dared I Ith September, 1980 of
the Industrial Tribunal at Nagpur in Reference (II) No. 22/78.

Y.S. Chita/e, R.K. Thakur, O.C. Mathur and K.J. John for the
Appellant
c
If. W. Dhabe and A.G. Ratanaparkhi for Respondent I.

G.L. Sanghi, V.A. Bahde, A.K. Sanghi and Miss Vasudha
Sanghi for Respondent 2.

D
The Judgment of the Court was delivered by

GUPTA J. During the pendency of a reference before the
Industrial Tribunal at Nagpur, a written agreement in settlement
of the disputes covered by the reference as also certain other disputes
between ·the management and the workmen was signed; on behalf E
of the trade unions representing the workmen the agreement was
signed by their office bearers. A few days later the executive com-
mittee of one of the Unions rejected the agreement on the ground
that the agreement had given rise to discontent among a section of
the workers whose problems had not been satisfactorily solved. A
question then arose, whether the agreement was a settlement within F
the meaning of section 2 (p) of the Industrial Disputes Act, 1947
from which the Union could not resile. The Tribunal by its award
held that the agreement was not a settlement binding on the union:
the validity of this award is challenged in this appeal by special
leave preferred by the management.
G
The relevant facts are those. The appellant, Brooke Bond
India Limited, a Company incorporated and registered under the
Indian Companies Act, hereinafter referred to as the company, have
a factory at Kanhan, District Nagpur, in Maharashtra. Two trade H
unions of workmen employed by the company function in the
32 SUPREME COURT REPORTS (1982] J S.C.R,

Kanhan factory; one is known as Bharatiya Swatantra Brooke
Bond Chaha Karamchari Sangh (Bharatiya Union for short) and the
other is called M.P. Rashtriya Brooke Bond Chaha Karamchari
Sangh (Rashtriya Union for brevity's sake). In this case we are
concerned with the Rashtriya Union. On September 27, 1975
Government of Maharashlra made a reference under section I 0
B (1) (d) of the Industrial Disputes Act, 1947 for the adjudication of
an industrial dispute between the company and the workmen in
respect of 4 demands set out in the schedule to the order of
reference. Subsequently on June 11, 1977 a joint charter of demands
was submitted by the workmen through the aforesaid two unions;
this charter included 26 demands. At a meeting of the executive
c committee of the Rashtriya Union held on August 19, 1977 several
resolutions were passed of which two only appear to be relevant for
the present purpose. By one of the resolutions a negotiation com-
mittee composed of six members including some of office bearers
of the union was formed "for a discussion to be held with the
management". The other resolution related to the 26 demands
D mentioned above and it said that "a proper decision" regarding
these demands would be taken after "due consideration of the pro-
posals given by the members and after placing the same before the
negotiation committee of both the unions". Thereafter two more
charters of demands, one by each union, were submitted. At a
meeting of the executive committee of the Rashtriya Union held
E on January 8, I 978 the office bearers of the union put it on record
that in respect of the 4 demands pending before the Tribunal the
union would accept a satisfactory settlement and that the executive
committee had granted permission to the negotiation committee for
carrying on discussion with the company and the Bharatiya Union
as regards the pending demands. Subsequently the resignation of
F some of the office bearers of the union led to the reconstitution of
the negotiation committee at a meeting of the executive committee
of the union held on February 18, 1978. On the subject of the
proposed settlement it was disclosed at this meeting that the com-
pany had agreed to obtain clarification from the head office on
several points including the absorption in company's employment
G of workers employed in loading and unloading job and confirma-
tion of casual workers. The general secretary of the Rashtriya
Union by a letter dated March 9, 1978 informed the factory
manager that the members of the reconstitued negotiation committee
"will participate in the negotiations to be commenced from 13th
H March, 1978 for arriving at an agreement". On March 16, 1978 a
.
" BROOKE BOND v. WORKMEN (Gupta, J.) 33

memorandum of settlement was signed. The following office A
bearers of the Rashtriya Union signed the memorandum, the
working president, two vice-presidents, general secretary, joint
secretary and the organizing secretary. They were also mem-
bers of the negotiation committee along with others. On the
next day, March 17, a joint petition was filed before the Industrial
Tribunal signed by the factory manager of the company, the B
general Secretary of the Bharatiya Union and the General Sec-
retary of the Rashtriya Union praying that an award in terms of the
settlement be passed.

About a week later, on March 24, 1978 a meeting of the
executive committee of the Rashtriya Union was held in which "it
c
was unanimously resolved to withdraw from the agreement dated
March 16, 1978" in view of the "discontent amongst the workers
about the agreement". On April l, 1978 at an emergent meeting
of the executive committee of the Rashtriya Union, after an elabo-
' D
rate discussion on the agreement it was "resolved to reject the
agreement as the problems of the workers were not satisfactorily
solved". On April 7, 1978 an application was made to the Tri-
bunal on behalf of the Rashtriya Union praying that the agreement
be rejected.
E
The Tribunal heard the question as to the validity of the
settlement so far as the Rashtriya Union was concerned as a pre-
liminary issue. The Tribunal rejected the contention raised on
behalf of the Rashtriya Union that the agreement signed on
March 16, 1978 was only a draft agreement and held that it was
• intended to be a settlement. The Tribunal however came to the F
conclusion that it could not be treated as a settlement within the
meaning of section 2 (p) of the Industrial Disputes Act.

It cannot be disputed that unless the office bearers who signed
the agreement were authorised by the executive committee of the
Union to enter into a settlement or the constitution of the Union
G
contained a provision that one or more of its members would be
competent to settle a dispute with the management, no agreement
between any office bearer of the Union and the management can be
called a settlement as defined in section 2 (p.) There is no provision
in the constitution of the Rashtriya Union authorising any office
bearers of the Union to enter into a settlement with the management. H
We have referred above to the proceedings of the executive com-
mittee. As the Tribunal points out, the resolutions passed by the
I'
•
34 SUPREME COURT REPORTS [1982] 1 S.C.R.

A executive committee do not support the claim that the Negotiation
Committee was empowered to enter into .a settlement without seeking
ratification from the executive committee. The Tribunal held, in our
opinion rightly, that the fact that the agreement was signed by the
office bearers of the Union does not clinch the matter because the
executive committee at no stage had accepted the agreement. In
B fact no meeting of the executive committee was held before the
agreement was signed on March 16, 1978 to consider whether the
agreement was acceptable.

Section 2 (p) of the Industrial Disputes Act defines "settle-
ment";-
G
"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 pro-
ceeding where such ageement has been signed by the
D parties thereto in such manner as may be prescribed
and a copy thereof has been sent to an officer autho-
rised in this behalf by the appropriate Government and
the conciliation officer;"

E In the present case the purported settlement was arrived at not in
the course of conciliation proceedings. Section 18 (I) of the Act
provides :

"Section 18 . Persons on lvhotn settlements and a1vards

-
are binding :
F
(I) A setlement arrived at by agreement between the em-
ployer and workmen otherwise than in couse of con-
ciliation proceeding shall be binding on the parties to
the agreement :"

G It is also necessary to refer to rule 62 (2) (b) of the Industrial
Disputes (Bombay) Rules, 1957. Rule 62 (2) (b) is as follows:

"62. Memorandum of Settlenielit :,...-

H (I)
BROOOKE BOND v. WORKMEN (Gupta. J.) 35

(2) The settlement shall be signed by : A
(a)

(b) in the case of workmen, either by the President
or Secretary (or such other officer of a trade
union of the workmen as may be authorised by B
the Executive Committee of the Union in this
behalf), or by five representatives of the workmen
duly authorised in this behalf at a :meeting of the
workmen held for the purpose."

c
- Sub-rule (4) of rule 62 requires the parties to the settlement to
send copies thereof jointly to the prescribed authorities. That this
was done in the present case is not disputed. It was argued on
behalf of the appellant that as the agreement was signed in the
manner prescribed by rule 62 (2) (b) and as the requirements of
\ rule 62 (4) have been complied with, the agreement must be accepted
as a settlement within the meaning of section 2 (p) of the Industrial D
Disputes Act and as such binding on the Rashtriya Union under
section 18 (I) of the Act. But, as pointed out by the Tribunal,
rule 62 only prescribes the form of the memorandum of settlement
and by whom it should be signed, and the question whether the
procedure prescribed by rule 62 has been complied with will arise
only if there is in existence a valid settlement between the parties E
concerned. In this case it has been found that the office bearers who
signed the agreement were not competent to enter into a settlement
with the company and as such it cannot be said that an agreement
was reached between the employer and the workmen represented
by the Rashtriya Union. What is binding as a settlement under
section 18 (1) of the Industrial Disputes Act is an agreement bet- F
ween the employer and workmen. Here the Tribunal found that
there was no agreement between management and the Rashtriya
Union. Reliance was placed on behalf of the appellant on the
decision of this Court in Workmen of Mfs. Delhi Cloth and General
Mills v. Management of M/s. Delhi Croth and General Mills.(') Jn
that case among other matters rule 58 of the Industrial Disputes G
(Central) Rules, 1957 made under section 38 of the Industrial Dis·
putes Act, 1947 came up for consideration. Rule 58 (2) (b) of
the Central Rules which is similar to rule 62 (2) (b) of the Bombay
Rules reads :
H
(I) [!970] 2 S.C.R. 886.
36 SUPREME COURT REPORTS [1982] 1 S.C.R.

A "85. Memorandum of settlement:

(I) x x x

(2) the settlement shall be signed

B (a) x x x

(b) In the case of workmen, by any officer of a trade
union of workmen or by five representatives of
workmen duly authorised in this behalf at a
meeting of the workmen held for the purpose."
c It was held that the rule must be fully complied with if the
settlement is to have a binding effect on all workmen. Section 18 (3)
of the Industrial Disputes Act makes a settlement which has become
enforceable, binding among others, on all parties to the industrial
dispute. It is not clear why this decision was considered relevant.
Possibly this case was referred to for the observation occuring on
D page 897 of the report : "We may observe here that we were not
impressed by the appellant's argument that r. 58 rub-rule (2) (b)
required that the officer of a trade union of workmen must also be
duly authorised. We, however, do not express any considered
opinion in view of our conclusion on other points". Reference to
this observation may have been intended as a reply to the
E
construction sougbt to be put on rule 62 (2) (b) of the Bombay
Rules on behalf of the Rashtriya Union that the words "duly
authorised" applied not only to the five representatives of work-
men" but also to the office bearers mentioned in the rule to enable

F
them to sign the settlement; on such construction it was contended
that the office bearers of the Union who signed the agreement
were not specifically authorised to do so. This construction of
rule 62 (2) (b) was rightly rejected by the Tribunal. But neither
J
rule 58 of the Central Rules nor rule 62 of the Bombay Rules con-
tains anything to suggest that any officer of a trade union who is
entitled to sign a settlement must be deemed to have had the
G authority to enter into this setttlement. The procedure prescribed
by either rule 58 of the Central Rules or rule 62 of the Bombay
Rules presupposes the existence of a valid settlement, and the ques-
tion in this case is whether there was such a settlement. Another
case relied on by the appellant is The Sirsilk Ltd. and others v.
H Government of Andhra Pradesh and another.(1) The facts of that case

(I) [1964] 2 SCR 448.
BROOKE BOND v. WORKMEN (Gupta, J.) 37

are that after the proceedings before the Tribunal had come to A
an end and the Tribunal had sent its award to government the
parties concerned in the dispute came to a settlement. Sec-
tion 17 (I) of the Industrial Disputes Act lays down that every
award shall within a period of thirty days from the date of its
receipt by the appropriate government be published in such manner
as the appropriate government thinks fit. Section 18 (I) makes a 8
settlement arrived at between the employer and workmen other-
wise than in the course of conciliation proceedings binding on the
parties to the agreement. Under section 18 (3) an award of a
Tribunal on publication shall be binding on all parties to the indus-
trial dispute. In Sirsilk case difficulty was felt in giving effect to
the settlement because the proceedings before the tribnnal had ended c
and the tribunal had sent its award to the government before the
settlement was arrived at. This Court held :

"The only way in our view to resolve the possible
conflict which would arise between a settlement which
is binding under s. 18 (I) and an award which may D
become binding under s. 18 (3) on publication is to
withhold the publication of the award once the
Government has been informed jointly by the parties
that a settlement binding under s. 18 (!) has been
arrived at ...... In such a situation we are of opinion
that the government ought not to publish the award E
under s. 17 (I) and in cases where government is going
to publish it, it can be directed not to publish the
award in view of the binding settlement arrived at
between the parties under s. 18 (I) with respect to the
very matters which were the subject matter of adjudica-
tion under the award." F

We think this decision was relied on only to emphasize that a
settlement reached between the parties concerned in the dispute
must prevail if it is reached at any time before the publication of
the award. That is undoubtedly so, but the question before us is
different-which is, whether in fact a settlement within the meaning
G
of section 2 (p) of the Industrial Disputes Act was reached. Other
questions will arise only after it is found that there was such a
settlement in existence. Sirsilk does not therefore afford any
assistance to the appellant. The tribunal in support of the view
H
taken by it relied on a decision of the Delhi High Court. In
38 SUPREME COURT REPORTS [1982] 1 S.C.R.

Hindustan Housing Factory Ltd. v. Hindustan Housing Factory
Employees' Union and others, the High Court held :

" ... the contention on behalf of the petitioner-company
that the fact that the Memorandum of settlement was
in the prescribed form and was signed by one or more
B of the office-bearers of the Union is by itself sufficient
to make the settlement arrived at between the Manage-
ment. of the petitioner-company and the signatories
binding on the Union and all its members, is untena-
ble....
a
The language of s. 18 ( 1) clearly shows that the
settlement will be binding only "on the parties to the
agreement." The definition of "settlement" in s. 2 (p)
of the Act also states that "settlement" means a settle-
ment arrived at "between the employer and the work-
men." So, normally in order that a settlement bet-
D ween the employer and the workmen may be binding
on them, it has to,be arrived at by agreement between
the employer and the workmen. Where the workmen are
represented by a recognised Union, the settlement may
be arrived at between the employer and the Union.
If there is a recognised Union of the workmen and the
E Constitution of the Union provides that any of its
office-bearers can enter into a settlement with the
Management on behalf of the Union and its members,
a settlement may be arrived at between the employer
and such office-bearer or bearers. But, where the
Constitution does not so provide specifically, the
F
officer-bearer or bearers who wish to enter into a
settlement with the employer should have the necessary
authorisation by the executive committee of the Union
or by the workmen. A reading of rule 58 clearly
shows that it presupposes the existence of a settlement
G already arrived at between the employer and the
workmen, and it only prescribes the from in which
the Memorandum of settlement should be, and by
whom it should be signed. It does not deal with the
entering into or arriving at a settlement. Therefore,
H
(I) [1969] Lab. J.C. 1450
BROOKE BOND v. WORKMEN (Gupta, J.) 39

where a settlement is alleged to have been arrived at A
between an employer and one or more office-bearers
of the Union, and the authority of the offce-bearers
who signed the Memorandum of settlement to enter
into the settlement is challenged or disputed, the said
authority or authorisation of the office-bearers who
signed the Memorandum of settlement has to be esta- B
blished as a fact, and it is not enough if the employer
merely points out and relies upon the fact that the
Memorandum of settlement was signed by one or
more of the office-bearers of the Union."

In our opinion the above extract from the judgment of the C
Delhi High Court states correctly the law on the point. The appeal
is accordingly dismissed; in the circumstances of the case we direct
the parties to bear their own costs.

N.K.A. Appeal dismissed.
D