1. We are concerned in this writ petition with a settlement reached between an employer called the Mysore Sugar Company which is respondent 2 before us and to which we shall refer as the company, and an employees' association known as the Mysore Sugar Company Employees' Association which is respondent 3 and which will be called the association, on 22 July, 1966. This settlement is called in question by the petitioner which is another employees' union known as the Mysore Sugar Company Employees' Union to which we shall refer as the union.

2. The impugned settlement was reached between the association and the company in the presence of the State Conciliation Officer who was also the Commissioner of Labour. The settlement was the sequel to a proposal by the company which was announced on 22 June, 1966 to begin a lay-off with effect from 1 July, 1966. That announcement explained that the lay-off became necessary by pressure of external circumstances including the inability to secure raw materials and to find alternative employment for the workmen during the forced shut-down period. The company proposed to maintain only the bare minimum number of workmen required for essential works and for the expansion programme.

3. There was a conciliation proceeding which began at the instances of union which is the petitioner before us, held by the Assistant commissioner of Labour who was the concerned Conciliation Officer. Those conciliation proceedings came to an unsuccessful termination on 4 July, 1966.

4. On 12 July, 1966, the State Conciliation Officer who is respondent 1 before us, arranged for a joint discussion in regard to the controversies between the parties, and eventually on 19 July, 1966 he issued notices to them intimating his intention to commence a conciliation proceedings which began on 22 July, 1966. On the same day the impugned settlement was reached between the company and the association, and the three terms of the memorandum of settlement read :

"(1) It is agreed that in lieu of lay-off as proposed by the management, the association agreed to a reduction of 15 per cent of the total emolument of each employee, every month, for a period of one year from 1 July, 1966 to 30 June, 1967.

(2) When the company makes profits, the management will consider payment on the date of retirement, discharge, death or resignation of each employee to the extent of the cut that they have imposed upon themselves during the year 1 July, 1966 to 30 June, 1967.

(3) It is agreed between the parties to abide by the code of discipline."

5. The union was not a party to the settlement and so calls it in question in this writ petition apprehending that under S. 18 of the Industrial Disputes Act, the settlement may be enforced even against the workmen who were not members of the association, but were members of the union.

6. Sri Krishnayya appearing for the union denounced the settlement in more that one way. His first submission was that the settlement was not arrived at in the course of a conciliation proceeding under the Industrial Disputes Act, and so did not have the efficacy which is claimable under S. 18(3) of the Act. His second submission was that settlement derogated from the terms of an earlier settlement which had been reached in the year 1960 and which continued to operate under S. 19. His third submission was that the settlement transgressed the provisions of S. 23 of the Payment of Wages Act.

7. Although at one stage some argument was expended over the question whether after the failure of the first conciliation which was commenced by the Assistant Commissioner of Labour, a second conciliation could be commenced by the State Conciliation Officer. Sri Krishnayya had to admit that there was no statutory prohibition to the commencement of any such second conciliation proceeding.

8. The first question to which we should therefore address ourselves, is, whether, as contended for the union, the settlement was not one arrived at in the course of a conciliation proceeding under the Industrial Disputes Act. The argument constructed was that the settlement was reached between the company and the association without the instrumentality of the State Conciliation Officer, and so was not one arrived at in the course of a conciliation proceeding. It is now well-settled law as explained by the Supreme Court in Bata Shoe Co. (P.) Ltd. v. D.N Ganguly & Others [1961 - I L.L.J. 303] that the settlement to which S. 18(3) refers is not a settlement which is reached between the parties during the period when a conciliation proceeding is pending before a Conciliation Officer, but, is one which is assisted and aided by the Conciliation Officer by his advice and concurrence, provided he is satisfied that the settlement is fair and reasonable.

9. Sri Krishnayya urged that the State Conciliation Officer made no endeavour to promote a settlement between the company and the association and that there was no application of his mind to the question whether it was a fair and reasonable settlement. So it was urged that settlement was one reached between the company and the association nothing having been done by the Conciliation Officer to promote it, and, that the settlement was not therefore one arrived at in the course of a conciliation proceeding within the meaning of the enunciation made by the Supreme Court in Bata Shoe Company case [1961 - I L.L.J. 303] (vide supra).

10. The question, therefore, is whether the settlement was one reached between the company and the association independently of any endeavour made by the State conciliation Officer to induce them to reach a fair and amicable settlement, or, whether the State Conciliation Officer did play the role which he had to play under the provisions of S. 12 of the Industrial Disputes Act to assist a fair and amicable settlement.

11. In support of the assertion that the Conciliation Officer did no more than to merely affix his signature to a settlement which was placed before him by the company and the association without having made any effort or endeavour to induce that settlement, Sri Krishnayya depended principally upon the record made by the State Conciliation Officer on 22 July, 1966, during the course of the conciliation proceedings. That record reads :

"Conciliation proceedings held on 22 July, 1966 before the Commissioner of Labour in Mysore and State Conciliation Officer in Mysore, Bangalore, in respect of the industrial dispute between the workmen and the management of the Mysore Sugar Company, Ltd., Mandya.

[Reference. - Notice of lay-off issued by management.] The conciliation proceedings were taken today, 22 July, 1966, as scheduled. The Mysore Sugar Company Employees' Association and Mysore Sugar Company Employees' Union and the Secretary to the Mysore Sugar Company and Labour Welfare Officer were present. The accounts manager of the company was also present. A settlement was reached between the management and the Mysore Sugar Company Employees' Association and it was duly signed before the Commissioner of Labour. The Mysore Sugar Company Employees' Union disagreed with the terms of settlement and undertook to file a statement ..."

12. The argument maintained was that the State Conciliation Officer stated in the course of this record nothing about the effort made by him to induce the company and the association to reach a fair and amicable settlement. This record, according to Sri Krishnayya was the surest index of the inapplication of the State Conciliation Officer's mind to the nature of controversy between the company and the association or to the reasonableness of the conciliation reached between them for resolving that controversy. We were asked to say - and that is also the allegation in the affidavit produced on behalf of the union of which the deponent is its secretary - that all that happened during conciliation proceeding was that the company and the association brought to the State Conciliation Officer an agreement which had already been prepared, and, to report to the State Conciliation Officer that the settlement had been reached. It was also urged that thereafter the State Conciliation Officer affixed his signature to the memorandum of settlement after the memorandum was signed on behalf of the company and the association.

13. It was maintained that this is the proper inference to be drawn from the material before us becomes clear when we examine antecedent events. It is pointed out to us that in the earlier conciliation proceeding before the other conciliation officer in Mysore, the association was not a party and that after it met with an unsuccessful termination, when the State Conciliation Officer commenced the joint discussion, the representatives of the association declined to participate in the discussion if participation in the discussion was allowed on behalf of the union. It was also stated that even when the State Conciliation Officer held the conciliation proceedings on 22 July, 1966, the union preferred its own objections to the proposed settlement and that there was no consideration of the merits of those objections by the State Conciliation Officer.

14. The question whether the impugned settlement was aided or assisted by the State Conciliation Officer in a manner in which he should have promoted it, is a question of fact. The answer to the question whether a settlement was arrived at in the course of a conciliation proceedings, should depend upon what happened during the conciliation proceeding and the part played by the conciliation officer during that proceeding to bring into being a fair and amicable settlement for the resolution of the controversy in regard to which the conciliation proceeding commenced. If we are satisfied that the conciliation officer tendered advice to the parties before him to reach a settlement and that advice was what impelled the settlement and that settlement had the concurrence of the conciliation officer on his being of opinion that it was a fair and reasonable settlement, the settlement would be clearly one arrived at in the course of the conciliation proceeding.

15. We take the view that there is nothing in the record of the conciliation proceeding upon which Sri Krishnayya depends, which can persuade us to say that the state Conciliation Officer made no effort to promote a settlement. On the contrary, the statement in that record that a settlement was reached between the management and the assertion is not incompatible with the assertion made by the association and the company that the settlement was promoted by the State Conciliation Officer. What we should look into for the purpose of deciding whether the settlement was promoted by the State Conciliation Officer is the memorandum which records the settlement, and when we do so, we find that there is a clear recital in that memorandum that the State Conciliation Officer was the person who brought about the settlement. The contemporaneous record made on 22 July, 1966 makes it clear that it was on his advice and through his instrumentality that the settlement was reached. It is to our mind sufficiently obvious that the State Conciliation Officer was of the view that the settlement was both fair and reasonable.

16. Section 12(2) of the Industrial Disputes Act makes it the duty of the concerned conciliation officer to satisfy himself that the amicable settlement reached between the parties is a fair settlement, and we have no doubt in our mind that the settlement would not have had the concurrence of the State Conciliation Officer if he had not been satisfied that it was a fair settlement.

17. But it was urged that the allegation in the affidavit of the secretary of the union that the conciliation officer himself did not promote the settlement stands uncontroverted. We were asked to say that the truth of that allegation should have been repudiated by the State Conciliation Officer and that there is no such repudiation. It is true that although the company and the association have produced affidavits of which the deponents or their respective representatives in which the petitioner's allegation that the settlement was not promoted by the State Conciliation Officer is disputed, the State Conciliation Officer himself has not sworn to any similar affidavit. But it is well-settled as explained by the Supreme Court in C. S. Rowjee v. State of Andhra Pradesh that although normally a person like the State Conciliation Officer against whom an allegation is made of non-observance of the statutory provisions, should repudiate the truth of that allegation through an affidavit sworn to by him, the omission on his part to do so does not necessarily lead to the inference that the allegation against him is true. It becomes the duty of the Court in that situation to judge the probabilities and to decide whether the allegation is true or is not. That being so, it becomes our duty to asses the probabilities on the material which we have before us, to determine whether the settlement was assisted by the State Conciliation Officer and had his concurrence after his being satisfied that it was reasonable.

18. While the assertion of the union is that that settlement was not so arrived at, the counter-affidavit of which the deponent is the secretary of the company makes it clear that the settlement was reached in consequence of mediation by the State Conciliation Officer. The secretary repudiates the truth of the allegation made on behalf of the union that the memorandum of settlement had already been prepared before it was placed before the State Conciliation Officer. The relevant allegations read :

"It is not true that any memorandum of settlement was placed before respondent 1. Having regard to the difficult financial position of the company and the hardship that will be caused to labour in the event of lay-off the employees' association was agreeable to a cut in wages of labour. The management and the employees' association were not able to arrive at a definite understanding with regard to the other details. These were negotiated by respondent 1 and a settlement was brought about by him and embodied in the memorandum of settlement (vide annexure C of the petition)."

19. It is also seen from this affidavit that even the union had consented to the 15 per cent out in the total emoluments. In his affidavit the company's secretary proceeds to state thus :

"The employees' union was also agreeable for 15 per cent cut in the total emoluments of the company, for a period of one year commencing from 1 July, 1966. The petitioner-union however represented that the amount of out should be held as a deposit and should be paid to the workers within a specified period. The management, however, could not agree to this proposal and declined to go beyond committing itself to Clause (2) of the memorandum of settlement."

20. We feel persuaded that what is stated by the company's secretary is the truth. It receives substantial corroboration from the affidavit produced on behalf of the union the relevant part of Para. 21 of which reads :

"But the petitioner-union saw the prejudice the settlement would cause to the workers and the improper motives on the part of the parties to the bargain as it was not done with due care and caution in all fairness to the workers in general and if the proposed lay-off were to be bona fide and inevitable, then the union offered to consider the same and suggested a better alternative to the effect that it should not be the reduction of 15 per cent of the total emoluments of each employee every month but it must be a sort of advance to the company by the workers, the same to be repaid to the workers in the form of bonds analogous to the saving scheme bond which is already in force in company ..."

21. What is sufficiently clear from this part of the affidavit produced on behalf of the union is that even the union was willing to a 15 per cent cut in the total emoluments to which the association consented. The controversy in regard to this matter related to the question as to whether the workmen should make an advance to the company of that sum of money to be repaid in a particular way. We fail to see how any such controversy could at all have been resolved had there been no discussion of the terms of the settlement in the presence of the State Conciliation Officer. The counter-suggestion made on behalf of the union in regard to the details concerning the 15 per cent cut could have emanated only after there was discussion that there should be a 15 per cent cut in the presence of the conciliation officer, and, only after there was the requisite mediation and aid on the part of the State Conciliation Officer to promote a settlement.

22. The assertion in the affidavit of the company's secretary that the Conciliation Officer brought about the settlement, which receives sufficient corroboration from the record of the settlement to which we have already alluded, receives further corroboration from an affidavit produced on behalf of the association of which the deponent is its president. In para. 13, counter-affidavit, the president of the association states that the settlement was reached after "prolonged discussions and at the intervention of the conciliator".

23. We see no reason to disbelieve the statements contained in the affidavit produced on behalf of the company and that produced on behalf of the association. Those statements when considered along with the probabilities and the recital in the memorandum of settlement to which we have already referred, make it more than abundantly clear that we should not depend upon the allegation made in the affidavit produced on behalf of the union that what was brought to the State Conciliation Officer was a settlement which had already been reached between the company and the association without the State Conciliation Officer having done anything to promote it. In our opinion, the settlement was what was promoted by the State Conciliation Officer and assisted by him, and that it had his concurrence on his being satisfied that it was fair and reasonable.

24. It is not for us to decide whether the settlement is a fair and reasonable settlement. What is necessary is that the State Conciliation Officer should have been satisfied in his mind that it was fair and reasonable. We are satisfied that he was satisfied about it.

25. The association was established in the year 1942, according to the affidavit of the secretary of the company, among the 3,808 employees of the company, as may as 3,572 are members of the association. It is also undisputed that the union came into being only in April 1966, and although the union claims a membership of 1,900 employees, we think that the figures stated by the company's secretary are correct. So, the association had an overwhelming membership as contrasted with that of the union. At the stage when the company resolved on a lay-off, the association must have though that the hardship which might be caused to those who were laid off might be averted by the voluntary imposition of a cut on all the employees. On the main question as to whether there should be a cut, even the union was not of a different mind. The disagreement between the union and the association concerned the details such as the procedure relating to the cut. That being so, it should not surprise anyone that the State Conciliation Officer's concurrence was made available to the settlement which was reached between the association to which almost the entire body of workmen belonged, and the company, and that he was satisfied that in the circumstances the settlement was just and equitable, so we have no doubt in our mind that that settlement was one arrived at in the course of the conciliation proceeding before the State Conciliation Officer within the meaning of the expression occurring in S. 18(3) of the Industrial Disputes Act.

26. Sri Krishnayya does not dispute, and in our opinion very rightly, that if the settlement was arrived at in the course of the conciliation proceeding, the settlement, although it was reached between the association and the company, binds all the workmen and even those who are members of the union.

27. We should now discuss the submission made to us that the impugned settlement derogates from an earlier settlement reached in the year 1960 in the course of which a wage-structure was brought into being. It was urged that under S. 19 of the Industrial Disputes Act that settlement was still operating when the impugned settlement was reached on 22 July, 1966, since, although the period of five years during which it had no operate had expired, neither the company nor anyone else gave any intimation to terminate the settlement as required by S. 19. It is not disputed that no such notice was given by anyone for bringing about a cessation of the earlier settlement. So, it was maintained that since the impugned settlement brings about a reduction in the wages to the extent of 15 per cent of the total emoluments, it conflicts with the earlier settlement which created a wage-structure, and so has on validity, transgressing as it does the imperative provisions of S. 19.

28. We think that this argument rests upon the assumption that the impugned settlement disturbed the wage-structure brought into being under the earlier settlement. We think the it did not. Although the term of the settlement says that "in view of the lay-off" the association agrees to a deduction of 15 percent of the total emoluments of each employee during a period of one year, the clear meaning of the covenant when it is properly understood is, that during a period of one year, the employees will not, out of the wages payable to them, insist upon the payment of 15 per cent of the total emoluments payable to them. In other words, the agreement reached was that if the company did not make any lay-off, the employees would make a sacrifice of that part of their total emoluments. If that is what was agreed upon and the lay-off was the sacrifice which the employees imposed upon themselves in that way, no one can suggest that there was any alteration or revision of the wage-structure which continued to remain intact without any part of it having been disturbed. That is clear from the fact that Sri Krishnayya had to admit that the wages payable at the end of the period of one year are the wages claimable under the earlier settlement. If that be so, far from being any modification made to the wage-structure, the wage-structure remains in the same condition in which it was before, although the employees agreed to abstain from insisting upon the payment of the whole of the wages claimable under it.

29. It should be remembered that the industrial disputes which stood resolved through the settlement had no manner of concern with the wage-structure which was operating. The controversy surrounded the question whether there should be a lay-off by the company. The company agreed that it would not make any lay-off on the association in its turn consenting to forego for one year 15 per cent of the total emoluments. So the essence of the settlement was that concerned the proposed lay-off, and, the consent on the part of the association to forego a part of the total emoluments was only incidental. We do not, therefore, feel persuaded to think that the wage-structure was to any extent subjected to any impermissible modification.

30. That that is a proper inference to be drawn is what emerges from the second terms of the agreement which makes provision for the restoration of the cut which the employees had imposed upon themselves. That term states that

"if the company made profits, it would consider payment on the date of retirement, discharge, death or resignation of each employee, of the amount attributable to the cut which he had imposed upon himself."

31. What remains to be considered by us is the argument resting on S. 23 of the Payment of Wages Act. That section makes a contract or agreement under which an employee relinquishes any right conferred by the Payment of Wages Act, null and void to the extent it purports to deprive him of that right. Sri Krishnayya constructed the arguments that the right of which there was the deprivation under the impugned settlement was the right that there shall be no deduction from the wages payable to the employee other than those which S. 7 of the Payment of Wages Act enumerates. That section says that

"the wages of an employed person shall be paid to him without deductions of any kind except those authorized by or under this Act."

32. The stress of the argument was that the deduction from the wages for which the impugned settlement provides is not a deduction authorized by the Payment of Wages Act, and, that the settlement which is a contract providing for such deduction offends against the provisions of S. 7 and is therefore null and void. On behalf of the company and the association, the argument presented by Sri Ethirajulu Naidu and Sri Jagannatha Setty was that we should repel the argument founded on S. 23 of the Payment of Wages Act on the basis of the pronouncements of the Assam High Court in Dinaram v. Kakajan Tea Estate [A.I.R. 1958 Assam 77] and the High Court of Madhya Pradesh in Madanlal v. Superintendent, B. N. C. Mills . The enunciation made in these cases is that S. 23 of the Payment of Wages Act creates no prohibition against the alteration of a wage by contract or agreement and that once there is such alteration, that alteration does not amount to a deduction within the meaning of S. 7. The proposition stated in that way, if we may say so with respect, is unexceptionable. What is prohibited by S. 7 of the Payment of Wages Act is a deduction from the wage which is payable. But if by a contract or agreement the wage which is so payable becomes smaller and so the smaller sum of money is the wage payable, it would not be right to say that the substitution of a smaller wage for the higher wage is a deduction within the meaning of S. 7. What is prohibited by that section is a deduction which is not authorized by the Act from a wage which is payable. But if the wage payable becomes smaller by reason of a contract or agreement, there would be no impermissible deduction from that wage within the meaning of S. 7 since S. 7 concerns itself with deductions from the wage which is claimable by the employed persons.

33. However that may be, we lean to the view that the impugned settlement is not within the prohibition of S. 23 of the Payment of Wages Act. We take the view that settlement makes no deduction from the wages claimable from the employed person. As we have already observed, the consent under the impugned settlement by the association was to abstain from receiving from the company 15 per cent of the total emoluments during a period of one year subject to the repayment of that sum of money on a reconsideration of the matter by the company at the appropriate stage.

34. We are also of the opinion that S. 23 of the Payment of Wages Act does not govern a settlement to which S. 18(3) of the Industrial Disputes Act refers. That sub-section makes a settlement arrived at in the course of a conciliation proceeding binding, not only on those who are parties to it but also on the others. That statutory provision is, we think, a complete and exhaustive code on the question of settlement of industrial disputes. The purpose of S. 12 which enjoins a conciliation and the aim of S. 18(3) which infuses a settlement with the efficiency which it acquires under that sub-section, is the promotion of industrial peace and harmony between the employer and the employed. It is with that object in view that a conciliation is directed by S. 12 of settlement made binding under S. 18(3). These are special provisions concerning industrial disputes and the provisions in S. 23 of the Payment of Wages Act which are general provisions, must yield to those special provisions and give way to them. So, we think that in judging the binding character of a settlement under S. 18(3) we should be guided by those special provisions which the Industrial Disputes Act contains without being influenced by the general provisions contained in S. 23 of the Payment of Wages Act. We do not therefore accede to the proposition that the impugned settlement amounts to an infraction of S. 23 of the Payment of Wages Act.

35. The view that we take, appears to receive support from the provision of S. 9A of the Industrial Disputes Act. That section authorizes an employer who proposes to effect any change in the conditions of service applicable to any workmen in respect of any matters specified in Sch. IV. The first item in Sch. IV has reference to wages including the period and mode of payment, and that being so, what becomes clear is the employer may, by observing the procedure prescribed by S. 9A, bring about a change in the amount of wages as also in the period and mode of payment. If that is what he could do under S. 9 under the Industrial Disputes Act which contains a special provision like S. 9A, and, if what he so does is not within the prohibition of S. 23 of the Payment of Wages Act as undoubtedly it is not, the same should be the position with respect to settlement arrived at under S. 12(2) and to which S. 18(3) refers.

36. Before concluding, we should observe that Sri Krishnayya makes a submission to us at this stage that the settlement affects persons who are not workmen as defined by the Act.

37. This aspect of the matter is not referred to in the affidavit produced on behalf of the union and so is not traversed in the counter-affidavits. However that may be, all that we need do is to say that matter is not one about which we should say anything in this writ petition.

38. In the view that we take, this writ petition fails and we dismiss it. We, however, make no order as to costs.