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  • Mr. Justice V. Ramaswami
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  • Mr. Justice V. Ramaswami
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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

This petition for a writ of certiorari sought to quash an award of the Additional Labour Court, Madras in I.D. No. 92 of 1971.

Relevant factual narrative as set out in the opinion:

  • The first respondent had been President of the petitioner-society until 30 June 1969 and was editor of the petitioner’s Daily; the second respondent was the Daily’s news-editor.
  • The first respondent was removed as President and Sourirajulu was elected President; subsequent ill-feeling led to disciplinary action by the petitioner against the two respondents.
  • An enquiry officer was appointed but could not conclude the enquiry (allegedly due to the respondents’ unhelpful attitude). Based on the enquiry report, the management demoted the respondents.
  • The respondents failed to report for duty from 22 June 1971 and were dismissed on 28 June 1971.
  • The dispute proceeded through conciliation; following a failure report the Government referred the dispute to the Labour Court by order dated 20 July 1971 with the issues: (a) whether the non-employment of O. Ramalingam and M. Shanmugavel was justified and, if not, the relief to which they were entitled; and (b) to compute any monetary relief if capable of computation.
  • The Additional Labour Court took the reference in I.D. No. 92 of 1971. On 18 July 1973 a compromise memorandum was signed by counsel for the parties, containing terms (A–D) relating to rescission of termination, compensation in lieu of reinstatement to be decided by the Labour Court, and transfer of a related matter (W.J. No. 3 of 1972) for deciding relief for the first respondent.
  • The Government issued G.O. Ms. No. 696 dated 30 October 1973 transferring W.J. No. 3 of 1972 from the Principal Labour Court to the First Additional Labour Court.
  • An enquiry to give effect to the compromise was held (witness examined on 15 December 1973; oral arguments on 22 December 1973); the award was made on 26 December 1973 and published on 10 January 1974.
  • The present writ petition challenges that award.

Legal Issues Presented

  1. Whether the compromise filed in the Labour Court on 18 July 1973 was valid, in particular whether the counsel for the management had authority to enter into the compromise and whether the petitioner (management) was aware of it.
  2. Whether the Labour Court was required to and/or did examine the compromise for justness, reasonableness and propriety before making an award based on it.
  3. Whether the compromise was void for vagueness or lack of clarity (specifically whether the date for computing compensation was sufficiently certain).
  4. Whether the Labour Court acted beyond its jurisdiction in directing payment of the respondents’ share capital held in the co-operative society, a matter said to be governed by bye-law 8 and within the Registrar of Cooperative Societies’ domain.

Arguments of the Parties

Petitioner's Arguments

  • The compromise was invalid because the counsel who signed it on behalf of the management did not have authorisation and the petitioner was not aware of the compromise.
  • The Labour Court failed to make any finding that the compromise was just, reasonable, proper or in the interests of the management; in the absence of such a finding the award could not properly be made on the basis of the compromise.
  • The compromise was vague and unenforceable, for example by failing to specify the date from which compensation in lieu of reinstatement was to be computed.
  • The Labour Court exceeded its jurisdiction by directing repayment of the share capital held by the respondents in the co-operative society because repayment disputes fall under bye-law 8 and are for the Registrar of Cooperative Societies, not the Labour Court.

Respondents' Arguments

  • The respondents denied that the compromise was unauthorised or that the management was unaware; they stated (and provided evidence) that Sourirajulu (the new President and deponent to the petitioner’s affidavit) had instructed the management’s counsel to enter into the compromise and had been present during subsequent proceedings.
  • They argued the matter concerned a compromise (as opposed to a settlement that binds many workers), and therefore the Labour Court was not required to investigate the justness/reasonableness of the compromise in the way required for collective settlements affecting many workmen.
  • They pointed to the management’s lack of objection to repayment of the share capital, indicating consent to its return, and noted that the amounts belonged to the respondents.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Shrimati Jamilabi Abdul Kadar v. Shankarlal Gulabchand and Ors., C.A. No. 43 of 1968 (S.C.) Authority for the proposition that, barring lack of good faith, counsel appearing for a party has implied authority to enter into a compromise on that party’s behalf. The court relied on this authority to uphold the implied or express authority of the counsel who entered into the compromise for the management and to reject the petitioner’s contention that the compromise was invalid for want of authorisation.

Court's Reasoning and Analysis

The opinion walks through the four principal objections pressed by the petitioner and deals with each sequentially:

  1. On the alleged lack of authority to compromise:
    • The respondents filed a counter-affidavit asserting that Sourirajulu (the management’s President and deponent to the petitioner’s affidavit) had instructed the management’s counsel to enter into the compromise and was present during the subsequent proceedings (document filing, examination on 15 December 1973, and arguments on 22 December 1973).
    • The management’s senior counsel wrote a letter confirming that he had been instructed by Sourirajulu to enter into the compromise, that he was aware of it, and that Sourirajulu was present at the proceedings.
    • No reply affidavit was filed by the petitioner to controvert these allegations.
    • Relying on the precedent cited (Shrimati Jamilabi Abdul Kadar), the court reiterated the principle that counsel appearing for a party has an implied authority to enter into compromises barring lack of good faith or an express restriction.
    • Given the counter-affidavit and the counsel’s confirming letter (and absence of contrary affidavit), the court found the petitioner’s allegation of want of authority to be "incorrect and unfounded" and held that the counsel had the necessary authority to enter into the compromise; consequently the compromise was valid and binding.
  2. On the contention that the Labour Court failed to find the compromise just and reasonable:
    • The respondents submitted that the matter was a compromise in an individual dispute, not a collective settlement binding many workmen; therefore the heightened scrutiny applied to collective settlements (where courts examine reasonableness and justness) did not apply.
    • The court observed that Sourirajulu, who had instructed the counsel and participated in subsequent proceedings, could not be permitted to question the compromise's validity.
    • The petitioner’s counsel did not press an argument that the compromise was unreasonable or unjust before the court. Consequently, the court found no substance in the contention that the Labour Court erred by not separately finding the compromise to be just or reasonable in the sense argued by petitioner.
  3. On vagueness of the compromise:
    • The petitioner argued that the compromise did not specify the date from which compensation in lieu of reinstatement was to be computed and claimed this made the compromise vague and unenforceable.
    • The court reasoned that the compromise rescinded the dismissal, which made the respondents effectively in service up to the date of the compromise; consequently, compensation would be ascertained as on the date of the compromise.
    • The court noted that compensation is tied to a number of relevant factors (which the Labour Court considered) and that the Labour Court had fixed the compensation payable on that basis. The court rejected the vagueness contention.
  4. On the Labour Court’s direction to repay share capital:
    • The petitioner argued that repayment of share capital was not referred to the Labour Court, and that repayment disputes are governed by bye-law 8 and fall to the Registrar of Cooperative Societies.
    • The court observed that repayment was directed on the basis that the management had no objection to repayment. Given the court’s finding that the management’s counsel had authority and that the management had participated and did not object in the proceedings, the petitioner could not challenge this aspect under Article 226.
    • The petitioner did not controvert in affidavit that the management consented to repayment; the court noted that the amounts belonged to the respondents and their repayment did not impose an onerous obligation on the management. On this basis, the court rejected the contention that the Labour Court exceeded jurisdiction in directing repayment.

Holding and Implications

Writ petition dismissed with costs; rule nisi discharged.

Direct consequences stated in the opinion:

  • The court dismissed the writ petition and ordered costs to the respondents, fixing counsel fee at Rs. 150.
  • The rule nisi (the preliminary order issued when the writ was originally prayed) was discharged.

Broader implications, as indicated by the opinion:

The opinion does not purport to lay down a new legal precedent beyond applying the existing principle (as cited) that counsel has implied authority to enter compromises barring lack of good faith; the decision’s effect is confined to resolving the present dispute by upholding the compromise and the Labour Court’s award and imposing costs on the petitioner.

Costs and Observations on Conduct

The court commented on the petitioner’s conduct: it found that material facts (presence in court and instruction to counsel to compromise) had been suppressed in the petitioner’s affidavit and that false allegations were made against a senior counsel. While the respondents sought exemplary costs, the court declined to award exemplary costs but awarded ordinary costs to the respondents (counsel fee Rs. 150).

Show full summary ...

    The Madras Co-Operative Printing And Publishing Society Ltd., Represented By Its Secretary v. O. Ramalingam And Ors.

    1. This is a petition for the issue of a writ of certiorari to quash the order of the Additional Labour Court, Madras in I.D. No. 92 of 1971. The facts leading to the filing of this writ petition are as follows: The first respondent was the President of the petitioner-society till 30th June, 1969. He was also the editor of a Daily which is a publication of the petitioner. The second respondent was the news-editor of that Daily. The first respondent was removed from the office of President of the Society and one Sourirajulu was elected as the President. It appears that there was no love lost between the new president and the two respondents. Ultimately it led to some disciplinary action by the petitioner against the respondents and an enquiry officer was appointed by the petitioner. But, unfortunately the enquiry officer could not conclude his enquiry which was, according to the petitioner, due to the unhelpful attitude of the respondents. In view of the report of the enquiry officer, the management demoted the respondents to a lower post. But the respondents failed to report to duty on and from 22nd June, 1971 which ultimately led to their dismissal on 28th June, 1971. The dispute about their dismissal and non-employment was the subject-matter of conciliation proceedings and on the failure report, the Government referred the dispute to the Labour Court by its order dated 20th July, 1971. The issue referred to reads as follows:

    Whether the non-employment of O. Ramalingam and M. Shanmugavel is justified, and if not, to what relief they were entitled to; and

    (b) to compute the relief, if any to be awarded in terms of money if it could be computed.

    The above reference was taken on file by the Additional Labour Court, Madras, in I.D. No. 92 of 1971. On 18th July 1973, a compromise memo. was signed by the counsel for parties. The compromise memo. reads as follows:

    A. The management is agreeable to rescind the order of termination dated 30th June, 1971 terminating the service of Messrs. O. Ramalingam and M. Shanmugavel on the understanding that the latter would not press for reinstatement but would be willing to take compensation in lieu of reinstatement.

    B. The quantum of compensation in lieu of reinstatement, would be decided by the Additional Labour Court.

    C. The reliefs to be granted to Mr. O. Ramalingam would be decided by the Additional Labour Court after the disposal of W.J. No. 3 of 1972.

    D. Both the parties agree to apply to the Government or the Additional Labour Court for transferring the W.J. No. 3 of 1972 to the file of the Additional Labour Court from the file of the Principal Labour Court so as to decide the question of relief to be granted to O. Ramalingam.

    This compromise memo. was filed before the Additional Labour Court, Madras. It may be mentioned that W.J. No. 3 of 1973 which is referred to in the compromise memo. related to the payment of dearness allowance to the first respondent which was pending before the Principal Labour Court, Madras. In pursuance of this compromise, on a petition filed by the respondents, the Government, in G.O.Ms. No. 696 dated 30th October, 1973 transferred W.J. No. 3 of 1972 from the Principal Labour Court, to the First Additional Labour Court, Madras. For giving effect to the compromise and for deciding the compensation to be paid in lieu of reinstatement, an enquiry was conducted by the Additional Labour Court. The enquiry was held on 15th December, 1973 when the first respondent was examined as a witness. Number of documents were filed on behalf of the respondents. On behalf of the petitioner also three exhibits were filed. Oral arguments were addressed on 22nd December, 1973 and the award was made on 26th December, 1973. The award was published on 10th January, 1974. It is to quash this award the present writ petition has been filed.

    2. Though the petitioner had raised a number of objections in the affidavit, the learned Counsel for the petitioner, before me, confined himself to four of those objections. The first submission of the learned Counsel for the petitioner was that the compromise entered into and filed in Court on 18th July, 1973 was not valid in law. This was on the ground that the counsel appearing for the management, the petitioner, was not given any authorisation to enter into a compromise and that the petitioner was also not aware of the compromise. This allegation is denied by the respondents in their counter-affidavit. They have stated that in the enquiry held subsequent to the compromise to give effect to the terms thereof, Sourirajulu, the deponent to the affidavit filed in support of the writ petition was actually present and was instructing his advocate and in fact, on the basis of the instructions only, the first respondent was cross-examined when he was in the box. They also stated that even on the date of the arguments, the said Sourirajulu, the President of the Society was present. After filing this counter-affidavit, the learned Counsel for the respondents wrote a letter to the learned Counsel who represented the management before the Labour Court, drawing his attention to the allegations in the affidavit filed in support of the writ petition and asking for his remarks, if any. The advocate who is a senior counsel of this Bar has written in his letter that it is Sourirajulu, the deponent to the affidavit filed in support of the writ petition who had instructed him to enter into the compromise, that he was aware of the compromise and that as soon as the compromise was signed, he was also informed of the same. He had also confirmed the statement in the counter-affidavit that the said Sourirajulu was present when the documents were filed and oral evidence was taken on 15th December, 1973 and also when the arguments were advanced on 22nd December, 1973. Inspite of the counter-affidavit and the letter of the advocate which was actually addressed to the petitioner with a copy marked to the learned Counsel for the respondents, no reply affidavit was filed by the petitioner controverting the allegations in the counter-affidavit and the letter of the learned Counsel. I am, therefore, fully satisfied that the counsel who appeared for the management before the Labour Court had the express authority of the management to enter into compromise and the allegation in the affidavit filed in support of the petition, to say the least, is incorrect and unfounded. The learned Counsel for the petitioner even went to the extent of stating a preposterous proposition that a counsel appearing in a case could not act on the oral instructions of his party and that he could enter into a compromise only on the written authorisation. On the other hand, it is well settled that a counsel appearing for a party is always having an implied authority to enter into a compromise on behalf of his party. The only limitation is that if there was any written prohibition or limitation, he will have to act within that prohibition or limitation. As pointed Cut by the Supreme Court in Shrimati Jamilabi Abdul Kadar v. Shankarlal Gulabchand and Ors. C.A. No. 43 of 1968 (S.C.) barring the lack of good faith, implied authority of a counsel to enter into a compromise could not be denied in India. Therefore, both legally and in fact, the counsel who appeared for the management before the Labour Court, had the necessary authority to enter into the compromise and the compromise is legal, valid and binding on the management.

    3. It was next contended by the learned Counsel for the petitioner that the Labour Court had not given any finding that the compromise was just, reasonable, proper and in the interest of the management of the petitioner-society and in the absence of any such finding, the award could not be made on the basis of such a compromise. In meeting this argument, the learned Counsel for the respondents submitted that this is a case of compromise and not a settlement, which requires an interference of the Court on the question, of reasonableness. Only in the case of settlements, the Courts have held that the reasonableness of the settlement will have to be gone into by the Labour Court. The respondents also contended that all the cases which dealt with the matter of justness and reasonableness of the compromise related to the workers' claim that the compromise was not valid and not to cases like individual disputes as in this case. In other words, it is only where the settlement binds a large number of workmen and the compromise is entered into by a representative of the workmen, the Labour Court is bound to look into the justness and reasonableness of the settlement and not otherwise. It is not for me to go into these respective contentions as I have already found that it is the deponent to the affidavit filed in support of the petition who had instructed the learned Counsel appearing for the management, to enter into the compromise and he took part in the subsequent proceedings which were held in pursuance of that compromise. It is not open to him to question the compromise or otherwise to invalidate the same. I may also point out that it was not the case of the petitioner's counsel and in any case, though there is some allegation in the affidavit, he did not choose to argue before me that the compromise was in any way unreasonable or not just. There is, therefore, no substance in this contention of the learned Counsel for the petitioner.

    4. It was next contended by the learned Counsel for the petitioner that the compromise itself suffers from lack of clarity and it is unenforceable for vagueness. In support of this argument, the learned Counsel for the petitioner, relied on the first clause of the compromise which has already been set out. According to him, there is no reference to the date from which the compensation in lieu of reinstatement is to be paid and in fact, the Labour Court had to make a reference to this and ultimately find that the compensation will have to be ascertained as on the date of the compromise. There is no substance in this contention of the petitioner either. There was a dismissal order which, by the compromise, has been rescinded and which means that the respondents shall be deemed to have been in service till the date of compromise. Certainly, therefore, the compensation will have to be ascertained as on the date of the compromise. Further, the compensation is related to a number of other factors which we need not refer to here. On the basis of the relevant factors, the Labour Court had fixed the compensation payable. I am, therefore, unable to accept this contention of the petitioner.

    5. Lastly, it was contended by the learned Counsel for the petitioner that one of the amounts that was directed to be paid was the share capital held by the respondents in the co-operative society. According to the learned Counsel, there was no reference to this matter to the Labour Court and therefore the Court had acted beyond its jurisdiction. Further it is stated that the repayment of the share capital is governed by bye-law 8 of the Society and if any dispute arises with regard to the repayment of share capital, it will have to be decided by the Registrar of Cooperative Societies and it could not be a subject-matter of dispute before the Labour Court. Be that as it may, I find that the amount was directed to be returned on the basis that the management had no objection for repayment of the same. When once I do not accept the contention of the petitioner that the petitioner was not aware of the compromise or the further proceedings, the fact that there was no objection shows that be could not question it in these proceedings under Article 226. Further, it has not been challenged in the affidavit that the management did not give any consent for the repayment of the money. They were amounts belonging to the respondents and they are entitled to the same and no onerous obligation is cast by reason thereof. No other ground was raised at the time of argument. For these reasons, the writ petition is liable to be dismissed.

    6. The learned Counsel for the respondents contended that in view of the fact that in the affidavit, false allegations have been made against a leading counsel of this Bar and the respondents, that is a matter in which exemplary costs are allowable to the respondents. It is true that the petitioner has suppressed material facts of his presence in Court at the time of enquiry on 15th December, 1973 and on 22nd December, 1973 and also the fact that he had instructed the counsel to enter into the compromise. These are very serious matters which does call for at least a strong disapproval of the conduct of the petitioner. Though no exemplary costs could be given, certainly the respondents are entitled to their costs in this writ petition. The writ petition is accordingly dismissed with costs. Counsel fee Rs. 150. The rule nisi is discharged.

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    Comments

    The Madras Co-Operat... v. O. Ramalingam And Ors.
    (Sep 10, 1975)