1. AIMAL MIAN, J.- Since in these two petitions common points of law are involved, we intend to dispose of the same by this common judgment.
2. The brief facts leading to the filing of the above petitions, are that the petitioner is a private Limited Company and was running an Industrial Establishment under the name of Karimi Label Mills (hereinafter referred to as the Management). The workmen employed in the petitioner's industrial establishment had formed a . Registered trade Union, named, Karimi Label Mills Workers' Union, which was declared as collective bargaining agent (hereinafter' referred to as C. B. A). It seems that the dispute arose between the management and the C. B. A. It was alleged by the management that the workers had staged an illegal strike with effect from 28th August, 1975, whereas it was averred by the C. B. A. That the management was guilty of illegal lock-out. As result of the above dispute, the conciliation proceed--ings had commenced. After that the matter was agitated before the First Sind Labour Court through Applications Nos. 13 and 14 of 1975 under section 45 of the I.R.O., 1969 (hereinafter referred to as the 1. R. O.). It further seems that a consent interlocutory order dated 2nd October, 1975 was passed in the above proceedings in the-following terms :- "Heard the parties and their representatives. They have agreed to start the factory from 4th instant and the workers have consented ' to resume their duties and that the question of "Lock-Out" or Strike should be decided in their main application under section 34 .Of 1. R. O.
3. Orders are therefore made accordingly and thereby the applications under section 45 of the I. R. O.
4. Have become infructuous and dropped by consent."
2. It is the case of the management that after the above settlement, the factory had commenced its production but after a few days the C.B.A. Served a fresh charter of demands, which resulted in commencement of fresh concili--ation proceedings, wherein the management showed its inability to meet C. B. A.'s fresh demands in view of the financial difficulties. The above matter was settled amicably between the management and the C. B. A. The above settlement was signed on behalf of the management by three persons, whereas on behalf of the C. B. A. By its President and General Secretary. It may be advantageous to reproduce herein below the aforesaid settlement, which reads as follows :- "The General Secretary of Karimi Label Mills Workers Union, which is a Registered and C. B. A. Union of M/s. Karimi Label Mills, served a notice under section 26 (1) of 1. R. O., 1969 on the Employer on 28th October, 1975. After the expiry of the period under section 26 (I) the Union has served a strike notice under section '26 (3) of 1. R. O., 1969 on 12th November, 1975.
5. Negotiation were started before the Conciliator of the area and as a result of the negotiation the following settlement has been arrived in between both the parties.
6. TERMS OF SETTLEMENTS (i)The Management have expressed their inability to meet the demands raised by the Union due to adverse financial position of the Mills. The office-bearers of the Union are also satisfied with the above. Stated position of the management. After a prolonged discussion both parties have agreed that the Mills should be closed down and the workers should be paid of' their following legal dues :- (a)All the workers will be paid gratuity at 20 days wages for each completed year of service calculated on the basis of W. P. Industrial and Commercial Employment (Standing Orders)
7. Ordinance, 1968.
8. (b)On month Notice pay according to Order 12 of the Standing Orders Ordinance, 1968.
(c) All the workers will be paid Bonus for the year 1974-75 at. The rate of 28 days wages at Rs. 13 per day C. L. A. Will also be paid for 28 days bonus.
9. (d)The workers will be paid annual leave encashment if they are entitled for the same at Rs. 13 per day.
10. (e)All the workers will be .Paid their earned wages pending with the management.
11. (f )All the above terms and conditions will also be applied to those workers who were retrenched by the management prior to the settlement but have not received their legal dues as yet.
12. (2)The above payment will be made to the workers on 12th December, 1975 as the services of all the workers will be dispended by consent with effect from 11th December, 1975.
13. (3)It is agreed by both the parties that the workers will not lodge any complaint under Standing Order 11-A because the closure of, the Mills is by consent of the parties and it will not be challenged, any. Where.
14. (4)It is also agreed that the workers will be re-employed in case the management reopen the Mills within one year from the date of the signing of this settlement.
15. (5)It is agreed that for the execution of this settlement all the three partners will sign the memorandum of settlement and will equally be responsible for implementing this settlement. ,(6)
16. The Union has agreed to withdraw all the demands raised by them on 26th October, 1975 followed by a strike notice dated 12th November, 1975. After the above settlement is reached in between the parties. This agreement will be effective from 26th November, 1975 .
3. In pursuance of the above settlement, notice dated 10th December, 1975 were served on the workmen. It. May be pertinent to quote hereinbelow the above notice,. Which reads as follows :- ' ---To,----------------- Mr.------------------ Sub. : Cessation of Employment.
17. Dear Sir, .
18. Whereas the management of Karimi Mills. Are closing down their factory, in terms of mutual settlement with the Karimi Label Mills 'Workers Union dated 2nd December, 1975, and the parties have agreed to disband the services of all the workers. We regret to inform you that were. f. 11th December, 1975, you shall cease to be in our employment. You shall be entitled to your legal dues agreed upon in the aforesaid settlement. Please contact our office on any day during working hours. for, Karimi Label Mills C. C. To 1.The General Secretary, Karimi Label Mills Workers' Union, 406 Qamar House, M. A. Jinnah Road, Kaiachi.
19. 2.The Deputy Director, Labour Welfare Taufiq Manail, M. A. Jinnah Road, Karachi.
20. 3.Workers concerned.
21. 4.Notice Board.
22. It seems that in pursuance of the above settlement all the, workmen except two respondent No. 2 received their dues as per agreed terms. It m4.y be observed that we inquired from the learned counsel for the parties as to the number of the workers, which were employed. Learned counsel for the petitioner had stated that there were about 65 workers whereas learned Counsel for respondent No. 2 on being informed by one of the respon--dents No. 2 stated that there were about 100 workers. In any case except two all of the workers admittedly had left the service.
23. Respondent No. 2 in both the petitions did not accept the payment but initiated proceedings through Applications No. 459 and 460 of 1976 under section 25-A of the 1. R. O. In the Sind Labour Court Nos. 11 at Karachi. But respondents No. 2's above - applications for re-instatement were dismissed by the aforesaid Sind Labour Court by its order dated 21st July, 1976 inter alia on the ground that the mill was closed down and that all the workers excepting the two had collected their dues and that it would not be possible and proper to direct the petitioner to reopen the mill.
24. Respondent No. 2 in both the petitions being aggrieved by the above order filed Appeals Nos. 297 and 298 of 1976, which were allowed by the Sind Labour Appellate Tribunal by its order dated 25th January, 1977, whereby the petitioners were directed to reinstate both respondents No. 2. The petitioner being aggrieved by the above order have filed the present two petitions.
5. (a) Mr. Munawar Abbas, learned counsel for the petitioner has made the following submissions :-
(i) That the settlement arrived at between the management and the C.B.A. Is binding even on respondent No. 2 in view of section 4 of the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 (hereinafter referred to as .The Ordinance).
(ii) That under Standing Order No. 12 petitioners were entitled to terminate respondents No. 2's services by serving one month's notice or paying one month's salary in lieu of the notice and, therefore, the notice dated 21st January, 1976 terminating respondents No. 2's services was in accordance with law.
(b) On the other hand Mr. Shahanshah Hussain, learned counsel for respondent No. 2 has contended as follows :-
(i) That as the settlement arrived at between the management and the C.B.A. Was in violation of Standing Order 11-A, the same is not binding on respondent No. 2.
(ii) That even under Standing Order 12 (i), the petitioner could. Not have terminated respondents No. 2 s services without assigning a valid reason and therefore, termination notice on the basis of the illegal settlement is not legal.
25. (i.e) That the settlement was against public policy as clause 3 of the same provided that the workers would not lodge any complaint under Standing Order 11-A.
6. In order to appreciate the respective contention No. I of the learned counsel for the parties noted hereinabove, it may be appropriate to quote hereinbelow section 2 (a) and section 4 of the Ordinance and Stand--ing Order I 1-A, which read as follows :- Section 2 (a), -"collective agreement" means an agreement in writing intended to specify the conditions of employment, and entered into between one or, more employers on the hand, and one or more trade unions or where there is no trade union, the duly authorised representatives of a workmen, on the other ; '
26. Section4.-'Modification of Standing Orders.-the Standing Orders may be modified by means of a collective agreement and not otherwise.
27. Section 11-A.--.Closure of establishment. -Notwithstanding anything contained in Standing Order 11, no employer shall termi--nate the employment of more than fifty per cent of the n workmen or close down the whole of the establishment without prior permission of the Labour Court in this behalf, except in the "event of fire, catastrophe, stoppage of power supply. Epidemics or civil commotion.
28. Explanation.-- `Close down' in this Standing Order includes - lay-of. Of workmen beyond fourteen days where such lay-of results in closure of an establishment but does not include lock-out declared, commenced or continued in accordance with the provisions of the Industrial Relations Ordinance, 1969 (XXIII of 1969). '
29. It may be noticed that the above-quoted section 2 (a) of the------ Ordinance defines `collective agreement" as means an agreement in writing intended to specify the conditions of employment entered into between one or more employer on one hand and one or more trade unions or where there is no trade union by the duly authorised representatives of the workmen on the other, Whereas section 4 of the Ordinance provides that Standing Orders may be modified by means of a collective agreement and not otherwise. However, it is subject to the condition that no such agreement shall have the effect of taking away or diminishing any right or benefit available to the workmen under the provisions of the schedule. Furthermore, the above--quoted Standing Order 11- A, provides that notwithstanding anything contained in Standing Order 11, an employer shall terminate the employ--ment of more than 50% of the workmen or close down whole of the establishment without prior permission of the Labour Court in this behalf except in the event of fire, catastrophe, stoppage of power supply, epidemics or civil commotions.. It further provides in explanation that close down includes lay-of of workmen beyond 14 days, where such lay-of result the closure of an establishment but does not include lock-out declared, com--menced or continued in accordance with the provisions of the I. R. O.
30. A plain reading of sections 2 (a) and 4 of the Ordinance indicates that the Standing Orders provided in the schedule to the Ordinance can be modified by a collective agreement provided that such an agreement does not take away or diminish any right or benefit available to the workmen under the provisions of the schedule. There cannot be any doubt that the settlement entered into between the management and the C. B. A. In the instant case could be termed as a collective agreement,. However, it was urged by Mr. Shahenshah Hussain that since the above collective agreement intended to take away the right of respondent No. 2 to continue in service, therefore, it was not covered by section 4 of the Ordinance warrant--ing the modification of the Standing Order 11-A. It was also urged by him that in any case the above agreement is against public policy as it pur--ported to take away the workers' right to invoke Standing Order 11-A.
7. In support of the above contentions, he has referred to the famous case E. A. Evans v.
31. Muhammad Ashraf (PLD 1964 SC 536) and the case of Pakistan International Air-Gines.v. Sind Labour Court and 5 others (PLD 1980 SC 323). On the other hand Mr. Munawar Abbas in support of his above-noted conten--tion No. 1 has referred to the case of Management A. B. M. Associates, Lyallpur v. Haq Nawaz (1977 PLC 711), the case of Messrs Mohammadi Textile Mills Ltd. v. Ahmed and 37 others (1978 PLC 512) and the case of South British Insurance Employees Union v. Sind Labour Court and 4 others (1975 SCMR 49).
(i) In the above Supreme Court of Pakistan case reported in PLD 1964 SC 536; the Supreme Court of Pakistan while construing section 39 (1) of the Displaced Persons (Compensation and Rehabilitation) Act, 1958, inter alia held that a tenant cannot contract out of the protection of the above section by entering into an agreement with a landlord. It will suffice to observe that the above case is distinguishable from the instant case inasmuch as in the present case section 4 of the Ordinance itself provides that Standing Orders can be modified by a collective agreement.
32. There was no such provision provided in the. Displaced Persons Act.
(ii) As regards the case reported in PLD 1980 SC 323, it may be stated that the question before the Supreme Court of Pakistan was, whether an employer could appoint an employee on a purely temporary basis in violation of the provisions of the West Pakistan Industrial and Commer--cial Employment (Standing Orders) Ordinance, 1968, it was held that an emp--loyer cannot contract out of his obligation under the Ordinance by appointing an employee purely on temporary basis in violation of the Ordinance. The above case has also no direct application to the instant case. There cannot be any cavil to the proposition that an employer by his own act or even with consent of an employee can take away the protection provided under the law in a manner other than provided in the relevant law itself.
33. (i.e) Whereas in the case reported in 1977 PLC 711, the facts were that the management and the trade Union entered into a collective agreement, whereby all the workers paid of. In pursuance of the agreement, the workers received all dues in accordance with collective agreement. However, two of the workers approached the labour Court and prayed for reinstatement on the ground that the above collective agreement was in violation of Standing Order 11-A. Their applications were accepted by the Labour Court, Lyallpur, and they were ordered to be re-instated. The Management went in appeal, which was allowed by the learned Labour Appellate Tribunal. Punjab. It was held that in view of section 2 (a) and section 4 of the Ordinance, the Standing Order 11-A stood modified by the collective agreement entered into between the management and the trade Union providing the closure of the mill.
(iv) As regard the case reported in 1978 PLC 512, it may be observed that in the above case the facts were that an Industrial Establishment was closed. The retrenchment was resorted to after settlement between the management and the trade Union. In pursuance of the above settlement, the workers received monetary benefits: However, 38 of the workers filed applications before the Labour Court claiming re-instatements, which were allowed on the ground that the closure was in violation of the Standing Order 11-A. However, upon appeals the Labour Appellate Tribunal Sind allowed the appeals of the management and held that the above settlement was binding on the workers and that the contention that in the absence of the permission of the Labour Court for closure of the factory the above settlement was not binding, was not sustainable,
(vi) Whereas in the aforesaid case, reported in 1975 SCMR 49, the Supreme Court of Pakistan while declining to grant leave to appeal against the judgment of High Court of Sind & Baluchistan, whereby petitioners' constitutional petition challenging the granting of permission of the respondent under Standing Orders 11-A after taking steps for closure of the establishment was dismissed, , held that Standing Orders 11-A does not stipulate that the application to the Labour Court for permission to close down should be the first step in the process and that the above order only provides that no employer shall close down the whole of its establishment without prior permission of the Labour Court in this behalf.
8. We are inclined to hold that if a workman/worker on the basis of a collective agreement arrived at between the management and the collec--tive bargaining agent or, workers Unions of Workers' representatives obtains full payment in terms of the settlement, which are not in any way less favourable than the benefits, which the workers would have been entitled to obtain in terms of the Standing Orders, he cannot assail such an A agreement or claim re-instatement before a Labour Court or before any other forum on the plea that the closure of the industrial establishment was done without permission of the Labour Court in terms of Standing Order 11-.A, as he will be estopped from raising such a plea. We are further inclined to hold that under Standing Order l I-A, it is not incumbent upon an employer to file an application for obtaining permission of the Labour Court for closing down inter alia an industrial establishment as a firs step, but he may file the same at any stage in the process of closing down o the industrial establishment.
34. We are also of the view that clause 3 of the settlement provid--ing that the workers would not lodge any complaint under Standing Order 11-A does not render the settlement as a whole illegal as this clause can be severed from the rest of the settlement. The above clause, is void being against public policy and is not enforceable,
9. If respondents No. 2 would have received the -monetary benefits under the aforesaid settlement arrived at between the management and the C. B. A., they would have been estopped from bringing any legal action to assail the same. The above two-quoted and discussed cases of the labour appellate tribunals of Punjab and Sind would have been applicable on all fours but in the instant case respondent No. 2 have refused to accept the monetary benefits and, therefore, their cases are distinguished from the above two-cited cases.
35. We are inclined to hold that even a collective bargaining agent cannot bind a workman/worker by an agreement, which may be in violation of any provision of law. In such a case workmen/workers, who have not consented/acquiesced to such an agreement will be entitled c to assail the same provided they can show that they have been prejudiced by such an agreement.
36. Since under section 4 of the Ordinance, the C, B. A. Could modify the standing orders by entering into a collective agreement with the management provided that such an agreement should not have the effect of taking away or diminishing any right or benefit available to the workmen under the provisions of the schedule Such an agreement would be binding even on respondent No. 2 notwithstanding tat they were not party to the settlement. However, in the instant case the learned Sind Labour Appellate Tribunal has not examined this aspected at all in the impugned order but.
37. Proceeded on the assumption that simpliciter non-compliance of Standing Order l?-A would render termi--nation of services illegal.
38. We are; therefore, inclined to set aside , the impugned order and to remand the case.
10. As regard the second contention that under Standing Order 12 (1) there could have been simpliciter termination of service by serving one . Month's notice or by payment of. One month's salary in lieu of notice, it will suffice to observe that since respondents No. 2's services were terminated on the basis of the above collective agreement , entered into between the management and the C. B. A. And not in exercise of the alleged power contained in Standing Order 12 (1), in our view it is not necessary to go into the above question in these petitions.
11. For the aforesaid reasons, we allow the above two petitions and quash the impugned order with no order as to costs and remand the case to the learned Sind Appellate Tribunal with the direction to re-hear the appeal and to decide the aspect referred heneinabove in para. 9 after providing an opportunity to the parties to adduce evidence in case it is required.