Mohiuddin Khan and others Vs. Pakistan River Steamer Ltd. and others, 29 DLR (AD) (1977) 117

Case No: Civil appeal No. 14 of 1974

Judge: D.C. Bhattacharya,

Court: Appellate Division ,,

Advocate: Abdur Rob-1,,

Citation: 29 DLR (AD) (1977) 117

Case Year: 1977

Appellant: Mohiuddin Khan and others

Respondent: Pakistan River Steamer Ltd. and others

Subject: Labour Law,

Delivery Date: 1977-1-4

 
Supreme Court
Appellate Division
(Civil)
 
Present:
Syed A.B. Mahmud Hussain CJ
Debesh Chandra Bhattacharya J
Fazle Munim J
 
Mohiuddin Khan and others
......................Appellants.
Vs.
Pakistan River Steamer Ltd. and others
…………...Respondents
 
Judgment
January 4, 1977.
 
Trade Union Act (V of 1965)
The right of the employees of an establishment to collective bargaining for their legitimate interest is one of the corner stones of modern legislations. A Trade Union of employees  has been recognized as a very effective vehicle of such collective bargaining. The East Pakistan Trade Union Act, 1965 which was enacted on repealing the Trade Union Act of 1926 has embodied provisions for constitution of a Trade Union of workers as well as of employers primarily for the purpose of regulating the relation between workers and employers or workers and workers or between employers and employers as will appear from the definition of a Trade Union as given in section 2 (n) of the Act.…. (13)
 
Lawyers Involved:
Abdur Rab-1, Advocate on Record—For the appellants.
Kazi Shafiuddin, Advocate instructed by A. Rob-II, Advocate-on-Record.—For the Respon­dent No. 1.
Ex parte—Respondents Nos. 2-20.
 
Civil appeal No. 14 of 1974.
(From the Judgment and Order dated 19-6-69 passed by the Dacca High Court, in petition No. 532 of 1967)
 
JUDGMENT
D.C. Bhattacharya, J.
 
This appeal by special leave is against a judgment of a Bench of the Dacca High Court, setting aside an order of the Labour Court, on an application made by Respondent No. 1, and incorporated Com­pany engaged in carrying passengers and car­goes by steamers, under Article 98 of the then Constitution of Pakistan, 1962.
 
2. The appellants who were formerly employees of the Respondent Company were retrenched by the Respondent Company in pursuance of an agreement entered into between the Respondent Company and Respondent No 2, which happens to be a registered Trade Union of the employees of the said Company. The case of the Respondent Company is that in November, 1966 the Respondent Company retrenched 149 of its clerks by serving notice of retrenchment to be effective from the 1st of December, 1966. Respondent No. 2, the Employees Union, being dissatisfied with this decision of the Company initiated conciliation proceedings but, the same having failed, ins­tituted a labour dispute case under section 6 and also filed a complaint under section 31 of the East Pakistan Labour Disputes Act 1965 (hereinafter referred to as the Labour, Disputes Act). This Company and the Union having subsequently come to an agreement executed on 17-2-67, a Memorandum of Settle­ment signed by both the parties setting out a policy of retrenchment. In accordance with the said settlement, as claimed by the Company, 50 out of 149 clerks, who were served with retrenchment orders, were taken back uncon­ditionally but the cases of 54 out of the remain­ing retrenched 99 clerks were not considered at all. So far as the other 45 clerks were con­cerned, they were reinstated after retrenching a new set of 45 clerks, who were originally Flat clerks and later on appointed as Shore clerks but were transferred back to the posts of Fiat clerks just before their retrenchment. Out of these 45 clerks, who were thus newly retrenched, 21 felt aggrieved by this decision of retrenchment and instituted complaint cases under section 25(1) of the East Pakistan Em­ployment of Labour (Standing Orders) Act, 1965 (hereinafter referred to as the Standing Orders Act alleging, inter alia, that the re­trenchment orders were malafide and collusive and nor in accordance with law, that the Union had no locus standi to enter into any agree­ment on behalf of the said retrenched employees and that such an agreements was not binding upon them.
 
3. Respondent Company filed written state­ments in the said cases and asserted therein that the retrenchment orders were in accord­ance with the provision of section 13 of the Standing Orders Act which provided for re­trenchment category wise and that it was not correct that they were transferred from Flat to Shore series freely, that the Union in ques­tion was a registered as well as a recognised Trade Union, which was competent to enter into an agreement on behalf of the complainants.
 
4. The Labour Court, by its order dated 8-8-67 held that the agreement entered into between the Company and the Union had no legal effect and directed the Company to re­instate all the complainants with full back wages and other benefits due to them.
 
5.   Respondent Company thereupon moved the Dacca High Court under Article 98 of the late Constitution of Pakistan 1962 making these complainants respondent Nos. 3 to 20 for a declaration that the decision of the Labour Court in the Complaint cases referred to above had been made without lawful authority and were of no legal effect. Out of the 27 complain­ant respondents, respondent No. 4 alone appeared and contested the claim of the Company. The Union was made  Respondent No. 2 which also appeared contending, inter alia, that the Union entered  into a bonafide and   lawful agreement with the Company, having had regard to the good of the  maximum number of  the employees, that when the Flat  clerks whose services were   absorbed in the Shore establishment were found to be junior in the said establishment they were first reverted to their substantive posts in the category of Flat clerks and then retrenchment was effected according to the seniority in that category and that the Union being a registered Union under the Trade Union Act and being also recogni­sed by the Company, that was competent to enter into an agreement with the Company on behalf of the complainants who were members of the Union and as such the  said agreement was binding upon them.
 
6. On a consideration of the materials on record, the High Court came to the finding that the Respondent Union was a registered Trade Union but not a recognised Union but that the employee respondents having been members of the said registered trade union, the agreement which was entered into by the Company and the Trade Union was binding upon the members of the said Union including the employee respondents.
 
7. The  learned Judges of the Dacca High Court came to a further finding that the establishment of Flat clerks and Shore clerks formed separate and distinct categories of wor­kers and that the reversion of certain clerks who were originally Flat/Towing Steamer clerks but were transferred  to the posts of Shore clerks and, on being found that they were surplus  in Shore jobs were retransferred to their original posts of Flat-cum-Towing Stea­mer clerks, their seniority being determined in the latter category for the  purpose  of re­trenchment, was in accordance with the pro­vision of law.
 
8. 11 of the 27 employee Respondents having filed petition for special leave to appeal, leave was granted by the Supreme Court of Pakistan to consider two questions, namely, (i) whether the agreement entered into by the Union was binding on its members and (ii) whether the High Court was correct in holding that the clerks working on Flats and towing Steamers and those working on Shore belonged to two different categories.
 
9. Mr. A. Rab-1, learned Counsel appear­ing on behalf of the appellants, has  submitted that the Dacca High Court  was  not correct in holding that the Respondent Union had locus standi to enter into a binding agreement with the Employer Company on behalf of the appel­lants. Learned Counsel has drawn our atten­tion to the provisions of sub-section (1) of sec­tion 35 of the Trade Union Act (East Pakistan Act. No V of 1965) and provisions of section 14, particularly sub-section (2) thereof of the Labour Disputes Act. The aforesaid provisions of section 35(1) and section 14 are to the fol­lowing effect:

Sections 35 of the Trade Union Act:
 
(1) The officers of a recognised Trade Union shall, subject to the provi­sions of the  Industrial Disputes Ordi­nance, 1959 (LVI of 1959) be entitled to negotiate with the employer in respect of the matters connected with the employ­ment, the terms of employment and the conditions of work of all or any of the workers employed in the establishment or industry and the employer shall receive and reply letters of, and grant interviews to, the officers of such trade union in con­nection with any such matter except on which as a result of previous discussion on correspondence with them the emplo­yer has arrived at a conclusion.                                          
 
Section 14 of the Labour Disputes Act:
 
(1) A settlement arrived at in the course of conciliation proceedings or an award or a decision under clause (a) of sub-section (1) or published under sub­section (2) or sub-section (4) of section 13 shall be binding on —
(a) all parties to the labour dispute.
(b) all other parties summoned to ap­pear in the proceedings before a Court as parties to the dispute unless the Court records any specific order to the contrary in respect of any such parties.
(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 relates;
(d) where a party referred  to in clause (a) or clause (b) is com posed of work­ers, all persons who were  employed in the establishment or part of the establishment, at the case may  be, to which the dispute relates on the date the dispute first arose and all persons who subsequently become employed in that establishment  or part.

(2) A settlement arrived at by the agreement between the employer and the workers, other than in the course of a conciliation proceeding, shall  be  binding on all parties to the agreement and, in the case of an agreement between the employer and  the  workers  through  a recognised Trade Union, it shall be bin­ding also, in so far  as the workers are concerned on all persons who, on the date of the agreement, were  employed  in the establishment or part of the establishment, as the case may be, to which the dispute relates, and all persons who subsequently become employed in that establishment or part thereof and, in so, far the emplo­yer is concerned, on his heirs, successors or assigns in respect of the establishment to which the dispute relates."
 
10. Learned Counsel for the appellants has submitted that the impugned agreement dated 17-2-67 concluded by the Respondent Company and the Respondent Union    may come under sub-section (2) of section 14 of the Labour Disputes Act, as quoted above. The said provision refers specifically to a re­cognised Trade Union but has obviously no application to the case of an unrecognised Trade Union. The learned judges of the High Court having come to the finding that the Respondent Union was not a recognised Union should have held that the settlement entered into by such an Union has no binding effect so far as the complainant employees who were not  par­ties to that agreement was concerned. Accor­ding to the learned Counsel, the appellants who were, no doubt, found by the High Court to have been the members of the Respondent Union having not been parties to that settlement were not bound by it. Similarly, learned Coun­sel has submitted, section 35 of the Trade Union Act makes a specific reference to a re­cognised Trade Union and recognises its right to negotiate on behalf of the worker of the establishment about their terms and conditions of employment, whereas there is no such reco­gnition of any right of an unrecognised regis­tered Trade Union to represent the workers.
 
11. It has been contended by Mr. Kazi Shafiuddin, learned Counsel for the respon­dent, that the Respondent Union which is a registered Union is a juristic person and is competent to act in a representative capacity on behalf of its members.
 
12. Learned Counsel for the appellants has cited the case of Chittagong Mercantile Employees Association Vs. Chairman, Industrial Court East Pakistan, Dacca, (1967) 19 DLR SC 18—PLD 1966 SC 731 where the Supreme Court of Pakistan held that an unrecognised Trade Union, though registered, had no  locus standi to raise an industrial dispute on  behalf of its members, in an Industrial Court and has contended that the Respondent Union having been found to be an unrecognised Trade Union by the High Court was not competent to re­present the appellants though they were mem­bers of such Union and that as such any agree­ment entered into by the Trade Union  was not binding upon them. It is not necessary for us to examine the correctness of the said de­cision as the Labour Laws on which the judg­ment under appeal is based are different from those which were considered in the said Supre­me Court decision, as they have undergone many changes in the meantime. The decision of the Supreme Court was made on the basis of Trade Union Act, 1926 read with Industrial Disputes Ordinance 1959 whereas the instant case raises questions as to the meaning of the provisions of the Trade Union Act, 1965 (Act V of 1965) and the Labour Disputes Act (Act VI of 1965), which replaced the former enact­ments and the provisions of the later enact­ments shall have to be examined for finding out the answer to the question raised in this appeal.
 
13. For the proper appreciation of the question raised it is necessary to look into   the basic principle underlying the various Labour Legislations of the modern times. The right of the employees of an establishment to collective bargaining for their legitimate interest is one of the corner-stones of such legislations. A Trade Union of employees has been recognised as a very effective vehicle of such collective bargaining The East Pakistan Trade Union Act, 1965, which was enacted on repealing the Trade Union Act of 1926 has embodied pro­visions for constitution of a Trade Union of workers as well as of employers primarily for the purpose of regulating the relation between workers and employers or workers and workers or between employers and employers, as will appear from the definition of a Trade Union as given in section 2(n) of the Act. The said Act makes provision for registered Trade   Union and also for what has been termed in the Act a recognised Trade Union. The object, of the Act as recited in the preamble of the Act is for providing for the registration and recognition of trade union in certain respects, for defining the law relating to registered trade unions and recognised trade unions and for matters   con­nected therewith. From the said recital, it is clear that the legislative intent was that both recognised trade unions as well as registered trade unions which were not recognised should have functions under the Act. A recognised Trade Union must necessarily be a registered Trade Union but a recognised Trade Union appears to have some special advantage in the matter of negotiation and conclusion of agreement with the employer in certain cases, which is not enjoyed by a registered Trade Union, if not recognised.
 
14. A registered Trade Union has been given, under section 13 of the Trade Union Act, 1965 the status of a juristic person having a perpetual succession with power     to acquire and dispose of property and to contract. Chapter III of the Act contains provisions relating to, as the sub-title indicates, rights and liabi­lities of registered   Trade Union.  Section 15 of the Chapter enumerates the object on which the general funds of the Union may be spent and clauses (c) and (d) of that section recite the following object:
 
"(c) Prosecution or defence of any legal proceeding to which the Trade Union or any member thereof is a party when such prosecution or defence is undertaken for the purpose of securing or protecting any right of the Trade Union as such or any right arising out of the relations of any member with his employer or with a person whom the members employs.
(d) Conducting labour dispute on behalf of the trade union or any member thereof."
 
15. From the aforesaid provisions it is clear that one of the main objectives of a regis­tered Trade Union is to undertake the prose­cution or defence of any legal proceeding for the purpose of securing or protecting any right arising out the relation of any member of the Trade Union to his employer and also for con­ducting labour disputes on behalf of the Trade Union, or its member. The Labour Disputes Act, 1965 is an Act in pan materia which provides for the investigation and settle­ment of labour disputes and for maters con­nected therewith. Labour disputes, as has been defined in section 3(k) of the Labour Dis­putes Act, means, inter alia, any dispute or difference between employers and workers.
 
16. In the instant case 149 clerks of the Respondent Company, who were members of the Respondent Union, having been retrenched their cause was taken up by the     Respondent Union, and conciliation proceeding, as con­templated in section 5 of the  Labour  Disputes Act, was initiated. The question of retrench­ment of 149 clerks thus became a labour dis­pute. The conciliation proceeding having failed the Respondent Union made an “application under section 6 of the Act to the Labour Court for adjudication and determination of the said labour dispute. The Union was acting   in the dispute case in its representative capacity on behalf of all of its members. While the said labour dispute was pending before the Labour Court, a settlement was arrived at between the Company employer and the Respondent Union the representative of the members of the Union.
 
17.  We may take note here of section 31(1) of the Labour Dispute Act, the relevant, pro­vision of which is to the following effect:
 
''No dispute shall be deemed to exist unless it has been taken up for in­vestigation and conciliation by a conci­liation Officer in accordance with the pro­visions of section 5 or such dispute has been raised in the prescribed manner (a) by a recognised trade union where such Union exists, (b) by a registered trade union where a recognised union does not exist."
 
18. A recognised Trade Union appears to be preferred, under the said provision, to an unrecognised Trade Union for the purpose of raising a labour dispute. Respondent Union claimed itself to be a recognised Trade Union in the instant case, but the High Court came to the finding that although the said Union had been functioning some time as a recognised Trade Union and had been actively representing the cause of the workers of the Company, it was not, according to the strict provision of the Act, a. recognised Trade Union at the time when the disputed settlement was made. No other recognised Trade Union hav­ing been shown to have been in existence, the Respondent Union, being a registered Trade Union, was, according to the provision of clause (b) of section 21(1) of the Act, as has been qu­oted above, competent to raise the labour dis­pute on behalf of its members. The position of a recognised Trade Union is better than that of an unrecognised registered Trade Union in an­other aspect, as will appear from section 3 5 of the Trade Union Act, 1965, and sub-section (3) of section 14 of the Labour Disputes Act, 1965, on the basis of which the learned Counsel for the appellants sought to build up some argu­ments in support of the appeal, as has been no­ticed above. A recognised Trade Union can re­present in its negotiation with the employer not only the workers who are its members but also the other worker s of the same establishment, who are not its members, and any settlement co­ncluded between the employer and such a Trade Union is binding upon all the workers of the establishment, irrespective of the fact whether they were members of that settlement making Trade Union.
 
19. The expression "settlement", as has been used in sub section (2) of section 14, referred to above, has been denned in clause (q) of section 2 of the Act which is to the fol­lowing effect:
 
"settlement' means a settlement arri­ved at in the course of a conciliation pro­ceeding and includes an agreement in wri­ting between the employer and workers arrived at otherwise than in the course of any conciliation proceeding and which has been signed by the parties thereto in such manner as may be prescribed, and a copy thereof has be3a sent to the Director of Labour and to the Conciliation Officer concerned."
 
A perusal of the Industrial Disputes Rules and different forms given in the Schedule there­to indicate that a registered Trade Union is recognised to have the authority to represent the workers in serving a notice of strike, in obtaining a certificate of failure to a concilia­tion proceeding enabling it to initiate an in­dustrial or labour dispute and such other mat­ters.
 
Clause (a) of Rule 3 of the Industrial Dis­pute Rules provides that —
 
''an agreement may be signed by the President or Secretary or both of the Union."
 
30. The provision of sub-section (2) of section 14 of the Labour Disputes Act shows that ordinarily an agreement between the em­ployer and the workers other than in the course of conciliation proceeding, which the impugned -settlement was, shall be binding on all parties to the agreement. Respondent Union was un­doubtedly a party to the said agreement and as such the agreement was binding upon the Union. Learned Counsel for the appellants has contended that the right of recognised Trade Union to represent the workers has been spe­cifically recognised in the provisions but there has been no mention of a registered Trade Uni­on there.
 
21. The reason for specific mention of a recognised Trade Union and for the absence of any such mention of a registered Trade Union in the said provisions is obvious as an agreement other than in coarse of a conciliation proceed­ing to which a recognised Trade Union is not a party is binding only upon the parties to that agreement, that is to say, that if a registered Trade Union is a party to the agreement it shall be effective against the said Trade Union only, which means, only the members thereof. But in a case where a recognised Trade Union is a party such an agreement shall be binding not only upon the Trade Union as such i.e. its members, but also upon the remaining employees of the establishment who are not members of the said Trade Union. It should, however, be noticed that in course of a settle­ment arrived at in a conciliation proceeding or in case of an award or decision of labour court in a labour dispute, as will appear from the provision of sub-section (1) of section 24, of the Labour Disputes Act, a registered Trade Union appears to have similar  representative capacity.
 
22. Having regard to all these considera­tions we are of the view that the conclusion re­ached by the High Court as to binding effect of the settlement dated 17-2-69 upon the ap­pellants who have been found to be the mem­bers of the Respondent Union at the time of the said settlement was correct.
 
23. On the question whether Shore clerks and Flat Towing Steamer clerks belonged to two different categories of service for the purpose of retrenchment of the principle, 'first come, last go', as envisaged in section 13 of the Employment of Labour (Standing Orders) Act, 1965, the learned Judges of the High Court came to the finding, on a consideration of the materials on record, that in the establi­shment of the Respondent Company, Flat clerks and Shore clerks formed separate and distinct categories of workers and that there was no collusion between the Respondent Com­pany and the Respondent Union, when they admitted in the impugned settlement that the two employments i.e. Shore job and that of Flat Towing Steamer clerks were diff­erent and separate in status from each other and that those among the Flat-Towing Steamer clerks, who became surplus in Shore job be­cause of being junior in such service, would be treated initially as having reverted to their sub­stantive appointments as Flat-Towing Steamer clerks arid their seniority would be determined in the latter category for the purpose of retrenchment beyond requirement in that cate­gory. The learned Judges based their decision on a number of documents. Particularly annexures J series to the writ petition of the Respondent Company, from which it appears that the Shore job had been regarded to have been of a cate­gory different from and preferential to that of Fiat-Towing Steamer clerks. This classification has been accepted to be correct in the impug­ned agreement and the scheme or retrenchment as mentioned in the said agreement was agreed to be effectuated on the said basis. We have no manner of doubt that the finding of the High Court on that question as has been refer­red to above is in consonance with the mate­rials on record, and we find ourselves in agree­ment with the same.
 
24. It may be pointed out that if the find­ing of the High Court that the two groups of employees, namely, Shore clerks and Flat-Towing Steamer clerks belonged to two diff­erent categories is correct—we have indicated above that in our view the said finding is correct—the retrenchment effected was solely in accordance with the general provision of section 13 of the Standing Orders Act, 1965.
 
On the other hand, even if there is any doubt as to the validity of such categorisation, the disputed retrenchment being in accordance with the agreement between the employer and the workers, as represented by their registered Trade Union, may still be taken to be in conso­nance with the provision of section 13 of the Act which visualizes such an agreement by way of an exception to the general provision and as such valid and lawful.
 
The result, therefore, is that this appeal is dismissed, but in the circumstances of the case there shall be no order as to costs.
 
Ed.