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Miscellaneous Appeal No. 122 of 1964, decided on 31st May 1965.

S. 14(1) Second settlement between parties providing "all other conditions of employment except as modified herein shall remain in force as laid down in the last agreement" and that "the parties. undertake not to raise any demand for the period prior to the date of the execution of this settlement"‑First settlement entitling workmen to "full wages and allowances during absence" on account of work injury‑Second settlement coming into force on 14‑12‑62 allowing "14 days' full wages in a year"‑Claim relating to period prior to 14‑12‑62 to be settled according to provisions of first settlement.

S. 14(1) Workmen entering into a settlement and relinquishing all pending demands‑Settlement providing for counting of lay‑off period for purpose of annual increments‑Concession not shown to have retrospective effect‑Cannot be claimed for period prior to date of settlement.

S. 13 -Settlement‑Terms of agreement binding on parties‑Concessions not granted in settlement cannot be claimed.

Abdul Majid for Appellants.

S. M. Naim for Respondent No. 1.

Nemo for Respondents Nos. 2 and 3.

Dates of hearing: 10th and 13th May 1965.

This is a Miscellaneous Appeal under section 12(5) of the Industrial Disputes Ordinance from an award of the Industrial Court (West Pakistan) Karachi, dated 25th June 1964. By this award the learned Industrial Court disallowed the demands of the appellants.

2. Briefly, the facts giving rise to the present appeal may be stated. Appellants are the representatives of the workmen of respondent No. 1 company, which has two factories established in S. I. T. E. area Manghopir Road. The dispute was going on between the parties in respect of certain demands made by the employees. Some of the demands were settled during the Conciliation proceedings but no settlement could be arrived at between the parties in respect of the following three demands. The Conciliation Officer, therefore, issued a certificate to the appellants for getting these disputes decided by the Industrial Court. Accordingly, the appellants raised these disputes before the Industrial Court in Industrial Dispute No. 68 of 1963, under section 5(5) of the Industrial Disputes Ordinance, 1959. The demands in dispute are as under:‑-

"Demand No. 1.‑Payment of full wages for the period of absence on account of work injury during the period intervening the settlements, dated 12th December 1959, and 14th December 1962.

Demand No. 2.‑Period of lay‑off should be included in the period of service for purposes of grant of increments.

Demand No. 3.‑Bonus for the year 1961‑62 should be calculated on the basis of 60 hours as usual and the difference should be paid to the workers who have been paid on the basis of 50 hours."

The above demands were considered by the learned Industrial Court and rejected by order dated 25th June 1964.

3. Mr. Abdul Majid, representative of the appellants has supported these demands in this appeal on their behalf. The first demand as stated above relates to payment of full wages for the period of absence on account of work injury during the intervening period of the settlement namely between 11th December 1961, and 13th December 1962. The appellants case is that there were two settlements arrived at between the parties. The first settlement was arrived at on 12th December 1959, and the second settlement on 14th December 1962. By the first settlement the parties agreed that the employees would be entitled to full wages and allowances during the period when a workman is absent on account of any injury caused to him during the course of his employment in the respondent‑company i.e. any injury caused to him on duty, if advised by the company's doctor. Under the second agreement, however, this term was modified. Under its terms only 14 days full wages in a calander year are to be allowed to a workman for work injury. The appellants' contention is that the last agreement came into force on 14th December 1962, and the compensation to an employee for work injury from 11th December 1961, to 13th December 1962, was not covered by the second agreement. In view of the clear terms contained in the second settlement dated 14th December 1962, this contention is not without substance.

4. In this connection it will be useful to refer to the terms agreed upon between the parties in respect of the pending disputes in the second settlement which is discussed as Demand No. 8. The parties agreed on this point as under:‑

Demand No. 8‑other benefits.‑All other conditions of employ ment except as medified herein shall remain in force as laid down in the last agreement dated 12th December 1959.

The parties agree to accept the terms of this settlement in full and final settlement of all demands and disputes in existence up to the time of signing this settlement; and undertake not to raise or pursue during the operation of this settlement any demand except as provided "in the settlement and not to raise any demand for the period prior to the date of the execution of this settlement."

The learned Industrial Court on this point has observed that:‑----

"by the new settlement the parties had agreed to accept the terms of the new settlement in full and final settlement of all demands and disputes in existence up to the time of the signing of the settlement and the parties had undertaken not to raise or pursue during the operation of this settlement any demand except as provided in the settlement and not to raise any demand for the period prior to the execution of the settlement."

In other words he has held that the appellants are estopped in law to raise the demand in question as they had relinquished their right to do so under the terms of the second settlement. The learned representative of the appellants have challenged this finding. In my view the grievance of the appellant in this behalf is quite genuine. It is not one of those cases in which this demand was for the first time conceded under the second settlement. The claim of the appellants will either be settled under the terms of the first settlement or of the second settlement. Merely because the dispute was in conciliation would not mean that the appellants claim in respect of the intervening period had lapsed. The utmost that can be urged is that for the intervening period this claim cannot be settled under the terms of the second agreement. Admittedly the terms of the first agreement remained in operation as it was not terminated in terms of section 14(2) of the Industrial Disputes Ordinance, 1959, as amended. In these circumstances the clause in question must be given a reasonable interpretation. This clause appears to have reference to new demands and it was in that context that they undertook not to raise any demand for the period prior to the execution of the second settlement. If the intention had been different, it would' have been clearly mentioned in it. In the absence of any such; stipulation the learned Industrial Court fell into an error in depriving the appellants to get the benefit of the first settlement on the point under consideration. 1 would, therefore, set aside the finding of the Industrial Court on this point and hold that this claim will be settled according to the provision made in the first settlement.

5. Coming to the second demand it will be noticed that under it the appellants have claimed that the period of lay‑off should be included in the period of service for purposes of grant of increments. It is not disputed that this claim was accepted by the employers for the first time under the second settlement. Under clause No. 5(d) of the said agreement the following settlement was arrived at between the parties:‑

"Demand No. 5.‑Wages for Lay‑Off

(a)

(b)

(c)

(d) In case of a lay‑off, keeping in view the smooth running of the workshops and departments concerned, the junior workmen in service in the affected sections of work or trade shall be laid off first, and wherever possible a policy of rotation in subsequent lay‑offs shall be applied.

The period of lay‑off shall be included in the period of services for the purposes of grant of annual increment. For the accrual of annual leave and other benefits the provisions of the Factories Act in respect of period of lay‑off shall apply.

It is admitted that the Management is implementing the settlement in this respect from the 14th of December 1962. The appellants, however, claim that this clause also applies to the past period and should be given retrospective effect the learned Industrial Court has rejected this plea because it is of the opinion that under the terms of the agreement this concession was not given retrospective effect. The learned representative of the appellants has admitted before me that no such concession was granted to the appellants under the first agreement. It was granted for the first time under the Settlement dated 14th December 1962. It was, therefore, necessary for the appellants to satisfy me that it was given retrospective effect. I have not been able to find out any such term in the agreement which can lead to the conclusion that it has retrospective effect. On the contrary, as stated earlier, the appellants had relinquished all their pending demands in B lieu of the acceptance of the terms under the second settlement. I, therefore, agree with the finding of the learned Industrial Court that this term of the settlement cannot be given retrospective effect.

6. I do not find any force in the argument of Mr. Abdul Majid, that under the definition of a "Permanent Workman" as given in Standing Orders Ordinance III of 1960, the employees are entitled to get the lay‑off period counted towards their period of service for purposes of increment. Under it a workman is considered as permanent if he is engaged on permanent basis and includes a person who has completed his probationary period satisfactorily. It further provides that while calculating the period of probation any break therein which may be due to strike has to be included. It does not in the least confer any benefit on the workman in respect of lay‑off period for purposes of increment. Similarly, the contention of the learned representative that the Explanation of section 49‑B of the Factories Act 1934, is helpful to the appellants' case, has also not impressed me. It deals only with the question of annual holidays which a worker is allowed on completion of a period of twelve months continuous service in a factory. The Explanation only provides that a worker shall be deemed to have completed this period of service notwithstanding any interruption during this period brought about by a strike which is not an illegal one. This certainly can have no possible bearing on the point under consideration. These are nothing else but concession granted to a workman in certain circumstances which has nothing to do with increments.

7. The last question for consideration is whether the learned Industrial Court was justified in rejecting the claim of the appellants that the Bonus should be calculated at the rate of sixty basic hours. The appellants' case is that for financial year 1958‑59 the basic hours were fixed at sixty. Similarly, in the year 1959‑60, sixty basic hours were fixed for calculating the Bonus. Their grievance is that though for 1960‑61, originally a notice was displayed fixing 60 hours, but soon thereafter it was changed into 50 basis hours, and on that basis bonus was paid to the workers. This according to the appellants was not proper. Their representative contended that no reason has been made out for changing 60 basic hours into 50 basic hours. In order to appreciate this dispute it may be mentioned here that the appellants' demand for bonus was accepted by the contesting respondent under a settlement dated 12th December 1959. In this connection the parties agreed as under:‑

"It has been mutually agreed to pay an annual bonus to hourly workers whenever the financial position of the company allow on the following scale:‑

(a) Workers putting up their service between 6 but below 12 months of the financial year of the company (i.e., from 1st October to 30th September) will get 50 per cent. of a number of hours fixed for every financial year according to its result ... ... ... ...

(b) Workers putting up their service 1 but below 2

years ... ... ... 100

(c) Workers puting up their service 2 but below 3

years ... ... ... 150

(d) Workers putting up their service 3 but below 4

years ... ... ... 200

(e) Workers putting up their service 4 but below 5

years ... ... ... ... 300

(f ) More than 5 years of the number of hours

mentioned under para (a) ... ... 400

For the financial year 1958‑59 the basic hours are fixed at 60."

Thus, it is quite clear that 60 basic hours were only fixed for financial year 1958‑59. In respect of subsequent year basic hours were to be calculated according to the formula reproduced above. It is conceded on behalf of the appellants that if this formula is adhered to some of the workers will not be entitled to to get bonus on the basis of 60 basic hours. They, however, contended that since the Management in subsequent years also paid bonus on the basis of 60 basic hours, there is no justification to change the basic hours and to pay it on the basis of 50 basic hours.

8. On the other hand, the Management has contended that this agreement was reiterated by the parties in the second settlement dated 14th December 1962. Under it the appellants agreed by para. 1 of Demand No. 1 that all other conditions of employment except as modified shall remain in force as provided in the last agreement dated 12th December 1959, which included bonus formula for hourly workers also. It is contended on their behalf that the appellants are not entitled to by‑pass this agreement and to raise a new demand during the continuation of the said settlement. The contention of the Management is not without force. In law parties are bound by the terms of the agreement/ accepted by them and they are not entitled to claim any concession which has not been granted to them. The appellants are unable to establish that all their workmen can claim bonus at 60 basic hours under the above formulae. It is next contended by the appellants that the hourly rated workers should be paid bonus on the basis of the same formulae which is applicable to the monthly paid staff. Their representative urged that no discrimination should be made by the Management in this behalf. This argument has no force in view of the solemn agreement arrived at between the parties. The appellants even in 1962 agreed that the bonus should be paid to them on the basis of the formulae agreed upon in 1959. In view of the clear terms of the agreement it is not open to them to raise this new plea.

9. After going through the evidence led by the parties I am satisfied that the Management is treating its employers very generously. The evidence on the record shows that the employers have not earned any profit during the years 1960‑61 and 1961‑62. Since the grant of bonus is dependent on the financial position of the company, it was open to the respondent‑company to express their inability to meet this demand. Instead they are paying bonus to their workmen ex‑gratia. In the written argu ments submitted by the respondent‑company they have agreed to increase the minimum basic hours for the year 1961‑62 from 50 to 52 on the condition that the actual amount payable would be worked out exactly according to the bonus formulae laid down in the settlement dated 12th December 1959. This is without prejudice to their rights regarding payment of bonus during the period prior or subsequent to 1961‑62. Thus, in this way the respondents have increased the bonus to the extent of four per cent. and the maximum amount payable will work out to one month's wages. The appellants have not accepted this offer. In spite of that the respondents have agreed to pay them bonus on this basis for the year 1961‑62, subject to the condition that the arrears will be payable only to such of the workers who were entitled and paid bonus for the year 1961‑62 @ 50 basic hours and who are still in their employment. In the light of the above discussion I would hold that the Industrial Court was fully justified in rejecting the appellants claim for bonus at the rate of sixty basic hours.

10. In the result the appeal is allowed in respect of Demand No. 1. Subject to the above remarks the appeal is dismissed in respect of the rest of the demands. Parties are to bear their own costs.

S.Q. Appeal partly accepted.

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