As per case facts, the petitioner Union, recognized in 1995, entered into a bilateral settlement with the Maharashtra State Road Transport Corporation in 1999. A key Clause No. 114 stipulated ...
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Sayali
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION No. 5871 OF 2006
WITH
INTERIM APPLICATION No.1691 OF 2024
WITH
INTERIM APPLICATION No.2796 OF 2026
Maharashtra State Transport Kamgar
Sanghatana, 1/205, Navjivan Co-op. Hsg.
Society Ltd, Dr. Badkamkar Marg,
Mumbai- 400 008. … Petitioner
V/s.
Maharashtra State Road Transport
Corporation, A Statutory Authority having
its Head office at Vahatuk Bhavan,
Bombay Central, Mumbai 400 008, through
Mr. Ujwal Uke or his Successor in the Office
as the Managing Director and Others ... Respondents
Mr. Mihir Desai, Senior Advocate i/b Ms. Devyani
Kulkarni, for petitioner.
Mr. Nitesh V. Bhutekar, for respondent No. 1 – MSRTC and
Applicant in IA/2796 of 2026.
Mr. Vaibhav Jaydale, for Applicant in IA/1691/2024.
Ms. Mamta Shrivastava, AGP for State- respondent No. 2.
CORAM :AMIT BORKAR, J.
RESERVED ON :APRIL 30, 2026
PRONOUNCED ON:MAY 7, 2026
1
SAYALI
DEEPAK
UPASANI
Digitally signed by
SAYALI DEEPAK
UPASANI
Date: 2026.05.07
11:52:18 +0530
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JUDGMENT:
1.By the present writ petition instituted under Articles 226 and
227 of the Constitution of India, the petitioner has invoked the
writ jurisdiction of this Court, calling in question the legality,
propriety and correctness of the judgment and order dated 11 July
2006 rendered by the Industrial Court in Complaint (ULP) No. 334
of 2000.
2.The facts giving rise to the present proceedings, when stated
in a concise manner, disclose that in the year 1995 the petitioner
Union came to be registered as a recognised union in respect of all
employees of the undertaking of respondent No. 1 across the State
of Maharashtra. The said recognition was granted by the Industrial
Court upon satisfaction of the statutory requirements
contemplated under the MRTU and PULP Act, 1971, under which
there can be only one recognised union for a particular
undertaking. It is the case of the petitioner that since its
recognition, it has been functioning with the object of securing and
improving the service conditions of the employees. It is further
stated that after prolonged negotiations and deliberations between
the petitioner Union and the respondent Corporation, a bilateral
settlement came to be executed on 16 October 1999. Under the
said settlement, several benefits were extended to the employees
and certain concessions were granted by the respondent
Corporation in favour of the petitioner Union. One of the
significant stipulations forming part of the settlement provided for
deduction of an amount equivalent to 5% of the net arrears
payable to each employee under the settlement towards union
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fund, and for remittance of the said amount to the petitioner
Union along with requisite particulars. This clause, according to
the petitioner, formed an integral part of the overall settlement
arrived at between the parties.
3.It is, however, not in dispute that the implementation of the
aforesaid settlement was made subject to the approval of the State
Government by respondent No. 1. The respondent Corporation,
being an instrumentality of respondent No. 2 State, was required
to obtain formal sanction of the State Government before giving
effect to the settlement. The petitioner Union, as stated, agreed to
such a condition in good faith with a view to ensure that there was
no delay in implementation of the settlement. Upon the settlement
being forwarded, the State Government, by its communication
dated 1 October 1999, issued certain guidelines to the respondent
Corporation. It was indicated that approval to the settlement
would be conditional upon the State Government not being
required to extend any financial assistance or subsidy towards any
additional burden arising out of the settlement. A financial ceiling
of Rs. 72 crores per annum for the first year was also stipulated.
The State Government further directed that the entire financial
implication should be borne out of the internal resources of the
Corporation and that steps ought to be taken by the Corporation to
enhance productivity. These conditions, therefore, formed the
backdrop against which the settlement was considered for
approval.
4.In view of the aforesaid position, further deliberations took
place between the petitioner Union and the respondent
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Corporation, culminating in a final settlement which was duly
executed and thereafter forwarded to the State Government for its
approval. The State Government, by its Notification dated 01
November 1999, granted approval to the settlement, albeit with
specific exclusion of Clauses Nos. 110(2) and 114. Clause No.
110(2) pertained to conferment of certain facilities or concessions
exclusively upon the recognised union, while Clause No. 114
related to deduction of 5% from the net arrears payable to
employees and remittance thereof to the petitioner Union. It was
also communicated that the legality and constitutionality of Clause
No. 114 required further consideration by the State Government.
Consequently, the respondent Corporation proceeded to implement
the settlement excluding the aforesaid two clauses. The petitioner
asserts that notwithstanding such exclusion, the respondent
Corporation had in fact effected deduction of 5% from the arrears
paid to employees, and therefore, in terms of the settlement, was
under an obligation to remit the said amount to the petitioner
Union. The refusal of the respondent Corporation to do so
constitutes the core grievance of the petitioner. It is further
clarified that the petitioner does not dispute the implementation of
the remaining terms of the settlement and confines its grievance
solely to non-implementation of Clause No. 114, which envisages
deduction and remittance of union fund from arrears.
5.Aggrieved by the action of respondent No. 1 in not remitting
the deducted amount, the petitioner Union instituted a complaint
before the Industrial Court at Mumbai under Item No. 9 of
Schedule IV of the MRTU and PULP Act, 1971, being Complaint
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(ULP) No. 334 of 2000, along with an application for interim
relief. During the pendency of the said proceedings, the State
Government, by its communication dated 20 September 2004,
expressly declined to accord approval to Clauses Nos. 110(2) and
114 of the settlement. Notably, the said communication did not
disclose any reasons for such disapproval nor did it indicate the
basis on which the said clauses were considered illegal or
unconstitutional. The State Government was impleaded as a party
to the proceedings before the Industrial Court, however, no
affidavit or reply was filed on its behalf. Upon hearing the parties,
the Industrial Court, by its order dated 11 July 2006, came to the
conclusion that the respondents had not indulged in any unfair
labour practice as alleged and accordingly dismissed the
complaint. It is this order which is the subject matter of challenge
in the present petition, the petitioner contending that the findings
recorded therein are erroneous and liable to be interfered with in
exercise of writ jurisdiction.
6.Mr. Mihir Desai, learned Senior Advocate appearing on
behalf of the petitioner, submitted that respondent No. 2 does not
possess any authority under the Road Transport Corporation Act,
1950 to interfere with the administrative or managerial domain of
respondent No. 1, particularly in the matter of negotiating and
arriving at settlements with employees in accordance with law, so
long as such settlement does not cast any financial burden upon
the State. It was urged that Clause No. 114 of the settlement
merely embodies a consensual arrangement between the petitioner
Union and respondent No. 1, acting on behalf of the employees,
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whereby 5% of the net arrears of wages payable to each employee
is to be deducted and the remaining 95% is to be disbursed to such
employees who have accepted the benefits of the settlement.
According to the learned Senior Counsel, such a stipulation forms
part of a bilateral statutory settlement binding on both sides and
has no bearing on the financial obligations of respondent No. 2. It
was contended that respondent No. 2 has purported to exercise a
power which is not traceable to any provision under the Road
Transport Corporation Act, 1950, or the Industrial Disputes Act,
1947, or the MRTU and PULP Act, 1971, or any other governing
statute. The submission proceeds on the footing that the
settlement in question satisfies the tests of fairness and
reasonableness as laid down in industrial jurisprudence and stands
accepted by the employees, who by availing benefits under the
settlement must be deemed to have consented to the deduction
contemplated under Clause No. 114.
7.It was further submitted by the learned Senior Counsel that
respondent No. 2 has failed to take note of the settled legal
position as declared by the Supreme Court with regard to the
permissibility and constitutional validity of such deductions from
arrears of wages pursuant to a settlement. It was contended that
there remained no scope for respondent No. 2 to independently
examine or question the legality of Clause No. 114. According to
the petitioner, the action of respondent No. 2 in withholding
approval amounts, in effect, to a disregard of binding precedent,
which is impermissible in law. The impugned decision was thus
characterised as arbitrary, mechanical and suffering from
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perversity, rendering it void ab initio. It was also contended that
such action attracts the vice of arbitrariness under Article 14 of the
Constitution of India. Reliance was placed upon the decision of the
Supreme Court in the case of
Balmer Lawrie Workers' Union,
Bombay v. Balmer Lawrie & Co. Ltd.,
1984 Supp SCC 663 wherein
a similar clause relating to deduction towards union fund in a
settlement executed by a recognised union under the MRTU and
PULP Act, 1971 came to be upheld. It was submitted that the
Supreme Court, in the said decision, has explained the rationale
underlying such deductions, emphasizing their role in sustaining
trade union activity, protecting the interests of labour, and
promoting industrial harmony.
8.The learned Senior Counsel further submitted that the
aforesaid principle laid down by the Supreme Court has been
consistently followed by employers, employees and courts alike. It
was pointed out that even this Court, in
Ashok Tayade v. MSRTC,
(1997) 3 Mah LJ 486 has taken a similar view. In such
circumstances, it was urged that respondent No. 2, being a State
authority, was bound to act in conformity with the law so declared
and could not have adopted a contrary position. It was also
submitted that approval of Clause No. 114 would not have
entailed any financial implication upon the State, since the amount
in question was to be deducted from the arrears payable to the
employees themselves, who had derived benefit under the
settlement as a result of the efforts of the petitioner Union. On
these premises, it was contended that the impugned judgment and
order are liable to be quashed and set aside.
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9.Per contra, Mr. Nitesh Bhutekar, learned Advocate appearing
for respondent No. 1, submitted that in view of the conditional
nature of the approval granted by the State Government, the
Corporation was not in a position to implement Clause No. 114 of
the settlement. It was submitted that in these circumstances, the
petitioner Union approached the Industrial Court by filing
Complaint (ULP) No. 334 of 2000 along with an application for
interim relief under Item No. 9 of Schedule IV of the MRTU and
PULP Act, 1971. The Industrial Court, by its order dated 24 August
2000, directed the respondent Corporation to deduct 5% of the
arrears payable under the settlement and to retain the said amount
with the Corporation. Acting upon the said interim direction, the
Corporation deducted the amount and retained it, which is stated
to be approximately Rs. 10 crores. It was further submitted that
during the pendency of the proceedings, certain unrecognised
unions were also permitted to intervene and were impleaded as
parties to the complaint by an order of the Industrial Court.
10.It was further submitted that for the relevant period from 1
April 1996 to 31 March 2000, in respect of which the settlement
dated 16 October 1999 was arrived at, a substantial number of
employees, including those now represented by the applicant,
were in service of respondent No. 1. In terms of the settlement, 5%
of the net arrears payable to such employees has already been
deducted and continues to remain with the respondent
Corporation. It was contended that the employees represented by
the applicant, many of whom have since retired, are directly
affected by the outcome of the present proceedings, and therefore
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constitute necessary and proper parties. On this basis, an
application for impleadment has been moved. It was also
submitted that having regard to the present circumstances of such
retired employees, the return of the deducted amount to them
would provide material assistance at this stage of their lives, and
this aspect deserves due consideration.
11.Ms. Mamta Shrivastava, learned AGP appearing for
respondent No.2, submitted that the decision of the State
Government to withhold approval to Clauses Nos. 110(2) and 114
was preceded by due deliberation, as reflected in an Office Note
prepared in that regard. It was submitted that the said Note was
considered and approved by the competent authorities including
the Transport Minister, Additional Chief Secretary and Deputy
Secretary of the Transport Department. The matter was examined
in detail taking into account all relevant considerations. It was
pointed out that at the relevant time there existed one recognised
union, namely the petitioner, along with eleven other unrecognised
but registered trade unions. The petitioner union represented only
about 36% of the employees, whereas the remaining 64% were
affiliated with the other unions.
12.It was further submitted that although the petitioner union
had obtained recognition in the year 1995, such recognition itself
was the subject matter of challenge by other trade unions. Be that
as it may, it was contended that if Clause No. 114 were to be
approved and implemented, the deduction of 5% from the arrears
of all employees and its remittance exclusively to the petitioner
union would give rise to disputes amongst various unions.
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According to respondent No. 2, employees who were not members
of the recognised union would contribute to the fund but would
not derive any corresponding benefit, thereby leading to inequity
and industrial discord. It was on this basis that the State
Government declined to approve Clauses Nos. 110(2) and 114 of
the settlement. On these grounds, it was submitted that the
present petition is devoid of merit and deserves to be rejected.
REASONS AND ANALYSIS:
13.Having considered the rival submissions, the material placed
on record and the legal position which governs the field, the point
involved is whether Clause No. 114 of the settlement can be
treated as a enforceable part of the settlement arrived at between
the recognised union and the Corporation, or whether the State
Government was justified in withholding its approval on the
ground that such clause would not be proper because only a part
of the workmen were members of the recognised union.
14.In my opinion, the settlement in question is a statutory
settlement, entered into by a recognised union which is conferred
with a legal status under the Act. When such settlement is reached
after negotiation and in accordance with law, it acquires a binding
nature which is not dependent on consent. The settlement has
force which travels beyond individuals and attaches to the
industrial relationship. In that situation, the role of the State
Government remains within limits. Merely because the
undertaking is under control or supervision of the State, it does
not follow that the State can modify the terms of settlement. Such
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interference must have support in statute. In present matter, no
such provision is brought to notice.
15.The first submission of the petitioner is that respondent No.
2 has no authority under the Road Transport Corporation Act,
1950, or under the Industrial Disputes Act, 1947, or under the
MRTU and PULP Act, 1971, to interfere with Clause No. 114. This
clause is not creating any burden on State finances. It only
regulates how the arrears payable to employees are to be
distributed. A small portion, being 5%, is to be deducted and given
to the recognised union as union fund. The remaining amount is to
be paid to employees. Thus, the money does not come from State
Government. It arises from arrears which are otherwise payable to
employees themselves. If there is no financial obligation on the
State, then objection based on financial burden becomes
irrelevant. The State cannot claim that it is safeguarding public
funds. The reasoning given for refusal of approval appears to be
inconsistent with nature of clause. Approval power cannot be used
to examine fairness of an arrangement which does not affect State
finances.
16.The next submission relates to nature of settlement being
bilateral and statutory, and binding on employees who accept its
benefits. A recognised union is given status by law to act on behalf
of workers. When it concludes settlement, it does so in
representative capacity. Therefore, settlement is not confined only
to members of that union. It extends to employees covered by it,
subject to statutory provisions. The argument that only 36% of
employees were members of the recognised union, and that
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majority were affiliated to other unions cannot be accepted as
legal reason. Once recognition is granted, that union becomes
authorised agent. The settlement it enters into cannot be reduced
to a contract limited to its members alone. Hence, the
apprehension recorded in the Office Note that benefit would flow
only to 36% cannot determine legality. The binding force of
settlement flows from statute, not from percentage of membership.
17.The reliance placed on the judgment of the Supreme Court
in
Balmer Lawrie Workers' Union, Bombay assumes significance in
this context. That decision has recognised that contribution to
union fund through deduction from benefits under settlement is
not something alien to industrial law. The Court has explained that
such contribution supports functioning of union. Without financial
support, a union cannot effectively represent workers. Therefore,
such clauses have a rational basis. They are connected with larger
objective of industrial peace. It is also made clear in that decision
that mere fact of deduction from arrears does not make the clause
illegal. When such pronouncement exists, it was not open for the
State Government to ignore it and proceed as if the matter was
open for fresh examination. In that background, the challenge
raised by the petitioner that Clause No. 114 appears to have
substance.
18.The submission of respondent No. 2 that approval of Clause
No. 114 would create inter se disputes between recognised and
unrecognised unions cannot be a reason to deny effect to a lawful
settlement entered into by a recognised union. If that logic is
accepted, then no recognised union settlement would ever survive
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scrutiny whenever another union objects. The purpose of
recognition is to avoid multiplicity and to create a lawful
negotiating agent for the employees. The fear that the contribution
is made by all and the benefit is received by the recognised union
is also not a sufficient ground, because the contribution itself is
part of the settlement voluntarily accepted in the course of
collective bargaining. When the employees derive the benefit of
the settlement, it is not open to them to reject the corresponding
burden which formed the consideration for the settlement.
19.The Industrial Court, while dismissing the complaint,
appears to have proceeded on the footing that the respondents had
not committed any unfair labour practice because the State
Government had refused approval. The Court was required to
examine whether the refusal itself had legal sanctity and whether
the Corporation had failed to implement a binding settlement in
respect of a clause which was not shown to be illegal. In that
exercise, the Industrial Court ought to have given due weight to
the decision of the Supreme Court in
Balmer Lawrie and to the fact
that the disputed clause related only to union fund contribution
from the employees' own arrears. The impugned order accepts the
disapproval of the State as if that disapproval was conclusive. In
my view, the conclusion therefore cannot be allowed to stand.
20.The apprehension expressed on behalf of the unrecognised
unions that their members would be excluded from the benefit of
the contribution does not persuade me to uphold the State action.
The settlement was negotiated by the recognised union. Its binding
force flows from statute and recognition. The contribution to union
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fund is not shown to be discriminatory in the constitutional sense.
It is a part of the bargain. The employees have taken advantage of
the settlement and have received the arrears. Having done so, the
deduction contemplated by Clause No. 114 cannot be treated as
unlawful only because some other unions were outside the
settlement.
21.On a cumulative assessment, therefore, the submissions of
the petitioner deserve acceptance. The impugned order of the
Industrial Court, to the extent it rejects the complaint, is therefore
unsustainable. The complaint ought to have been allowed, because
the non remittance of the deducted amount amounted to failure to
implement a lawful settlement.
22.In the result, the petition succeeds.
(i) The judgment and order dated 11 July 2006 passed by
the Industrial Court in Complaint (ULP) No. 334 of 2000 is
quashed and set aside;
(ii) It is declared that Clause No. 114 of the settlement
dated 16 October 1999 is legal and enforceable in law;
(iii) The action of respondent No. 2 in withholding
approval to Clause No. 114 is held to be unsustainable and
without authority of law;
(iv) Respondent No. 1 is directed to remit the amount of
5% deducted from the arrears of employees, together with
complete particulars, to the petitioner Union in terms of
Clause No. 114 of the settlement, within a period of twelve
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weeks from the date of this order;
(v) In the event the amount has been retained in any
separate account, the same shall be transferred to the
petitioner Union along with accrued interest, if any, within
the aforesaid period;
(vi) Rule is made absolute in the aforesaid terms. No order
as to costs;
(vii) All pending interlocutory applications stand disposed
of in above terms. No costs.
(AMIT BORKAR, J.)
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