' These are two appeals filed under section 37(3) of the Industrial Relations Ordinance, 1969 against the decision, dated 28th of November, 1997 passed by the learned II1rd Sindh Labour Court in grievance Applications Nos.163 of 1994 and 164 of 1994 under section 25-A of the Industrial Relations Ordinance, 1969. Since these two appeals, both on points of law and facts, are similar, they are therefore, intended to be disposed of by this judgment.
2. The facts giving rise to the above appeals, briefly stated, are that the respondent in Appeal No.Kar-408 of 1997 had been in the employment of the appellant since 1960 and the Respondent in Appeal No.Kar-409 of 1997 had been in the employment with the appellant since 1964. Both of them were retired from service on attaining the age of superannuation i.e. 60 years with effect from 30th June, 1994 by letter, dated 28-6-1997. The respondents served that appellant with grievance notice, dated 9-7-1994 challenging the above action of the appellant which was duly replied by the appellant standing therein that respondents were retired strictly in accordance with the terms of agreement, dated 2-8-1983 between C.B.A and the appellant company. The respondents thereafter on 14-9-1994 filed grievance petition under section 25-A against the appellant on the ground that the service of the respondents have been terminated illegally and that they are entitled to be reinstated with full back-benefits and to continue in the appellant's employment till they are physically fit to perform their duties.
3. The learned Presiding Officer, after recording evidence, allowed both the petitions by the above common decision impugned in these appeals, whereby the respondents were reinstated to their services with back-benefits.
4. Mr. Sher Afghan learned counsel for the appellant submits that the learned Presiding Officer had erred in law by holding that the settlement, dated 2-8-1983 was of no avail, failing to take into consideration the provisions of section 39 of the Industrial Relations Ordinance 1969. In support of his contentions learned counsel for the appellant relied' on the following authorities:--
(i) In the case of James Iqbal v. Messrs Park Davis & Co. Ltd. and others, (1998 PLC 15) a Division Bench of the High Court of Sindh comprising Kamal Mansur Alam, J. (now, Chief Justice) and Sabihuddin Ahmad, J, after reproducing section 39 captioned as "settlement and award on whom binding referred to clause (d) of the said section, and observed that "Evidently under clause (d) above the terms of a settlement are binding on all workmen employed in the establishment on the date the industrial dispute, including petitioner, by mandate of the statute." This authority goes directly to support the contention of the appellant's counsel.
' The Humble Judges, distinguishing earlier judgment of another Division Bench of the Sindh High Court in the case of A.E.G. Telefunkon Pakistan (Private) Limited v. Sindh Labour Appellate Tribunal (1989 PLC 525) observed that "by resolution, dated 25-5-1979 the petitioner company prescribed 58 years as age of retirement for its employees and by another resolution, dated 20-5-1979 it was raised to 60 years. These resolutions then became the part of the service regulations of the company. When the respondent-employee was made to retire on attaining the age of 60 years he successfully challenged the decision before the Labour Court. The petitioner employer questioned the decision of the Labour Court by way of appeal to the Labour Appellate Tribunal subsequently through a Constitutional petition before this Court but both the appeal and the petition failed. It was held that the respondent-employee was appointed at the time when there was no prescribed age of retirement and the subsequent resolutions laying down such age was not applicable to him.
The argument that they were the outcome of an agreement with the Labour Union was considered independently and repelled on merit. It was thus mentioning in that case observed:-- "Normally rules or regulations affecting the substantive rights of the workers when framed by the employers can only be applied prospectively unless accepted by the worker. The petitioners on their own showing have on their own made the regulation fixing the age of retirement applicable with effect from 1st January, 1979 as stated above and was not introduced by way of any settlement" (underlined by me).
(ii) In the case of Pam Zareen v. Messrs Pakistan Security Printing Corporation Ltd. Karachi (1980 PLC 856) it was observed by Sindh Labour Appellate Tribunal that the employer has a right to retire a workman on account of superannuation age which should either be by rule or adopted by uniform practice. The learned Labour Appellate Tribunal relying on the case, of Pakistan Tobacco Company Limited Chitagong 1972 PLC page 190) observed that the rights flowing from the award" would still be enforceable notwithstanding the termination of the award. As such, the appellant had the right to be retained in service up to the maximum age of 60 years subject to the medical fitness but he had no right to be retained in service beyond the age of 60 years" (in terms of the award).
Concluding the discussion in the last para. of the judgment the learned Sindh Labour Appellate Tribunal held: that the respondent Corporation rightly retired the appellant on attaining the age of 60 years". and
(iii) In the case of Muhammad Sadiq v. American Express International Banking Corporation (1981 PLC 766) relying on two earlier decisions of this Tribunal reported as Eastern Express Company v.
Sindh Labour Court (1977 PLC 226) and Muslim Contractors Limited v. Shakir Ali decided by this Tribunal on 10th October, 1979 (perhaps. unreported till then) it was reaffirmed that" it is the right of the employer to retire its employees on attaining the age of retirement which is in force in the establishment either by way of resolution, practice or according to the settlement. The present case seems to be on a higher pedestal, as the retirement age has been fixed by mutual settlement arrived at between the C.B.A. and the appellant.
(iv) In the case of Pakistan Tobacco Co. Ltd. Chittagong v. The Chairman, Second Labour Court of East Pakistan and 18 others (1972 PLC 190) a Division Bench of the Dacca High Court considering the legal effect of the revocation under section 40(2) Industrial Relations Ordinance 1969 of a settlement arrived at between the parties observed that "From a reading of the section it appears that a provisions has been made that during the period of settlement which has been agreed upon by the parties it will remain binding on the parties and after the expiry of the period it shall also continue to remain binding on the parties until notice is given by either party to be settlement expressing its intention not to be bound by the settlement. It means that the binding effect of the settlement cannot be negotiated or agitated during operation of the settlement ceases to be effective. The consequence is that after the period of notice as contemplated in section 40(2) of the Ordinance the terms of the settlement become negotiable and the parties to the settlement can enter into a fresh settlement if they so desire, but it must be mutual. It also means that if there is a want of mutuality then either party can raise it as a dispute and take the matter to the Labour Court for getting a fresh award as the Labour Court shall decide. The interpretation sought to be given on the provisions of section 40(2) of the Ordinance that after the service of notice by either party to the settlement, the parties are placed into the position of status quo ante to the settlement cannot be accepted as it will be contrary to the well-recognised principle of the law that once a contract or settlement it arrived at and acted upon mere passage of time of its operation or any expression of intention unilaterally by one of the parties to the contract or settlement to terminate its binding effect does not and cannot put an end to the obligation flowing therefore, nor are they reverted back to the position of status quo ante. As it is physically impossible for a man to go back in point of time to the period anterior to the date of settlement, similarly it is against all principles of law and contrary to equity and justice that a party to a contract or settlement should be allowed unilaterally to change his position to his advantage and to the disadvantage of the other party simply because the period of the settlement has expired, even though the settlement was acted upon. This interpretation is in accord with the purpose of maintaining industrial peace and the growth of industrial production; it will also avoid social friction between the workers and the employers to a great extent." As will be noticed later, this judgment of the Dadca High Court does not lay down correct law in the face of unreported judgment of the Supreme Court. Infra is so far as settlement is concerned.
5. On the other hand. Mr. Jeelani learned counsel for the respondent submitted firstly that the agreement, dated 2nd August, 1983 cannot affect the respondents, rights retrospectively and secondly it was not enforcible as the period of two years fixed therein had already expired. At the time of retirement of the respondent no agreement as to the age of retirement was in existence. As such, the respondents are entitled to continue with their employments till they are physically fit to perform their duties. Reliance was placed by him on a number of authorities discussed below:--
(i) Boots Pharmaceutical Limited v. Member N.I.R.C. Bench Karachi and another (1994 PLC 476); In this case the effect of the expiry of settlement reached between employers and employees union was considered. Admittedly, the settlement had come to expire on 31-12-1991 after having subsisted for its normal and stipulated term of operation. The Union itself gave the notice of strike on 12-1- 1992 to the appellants, thus, even on the basis of admitted facts, the allegation that facilities and benefits of settlement were withdrawn to compel the union to sign a settlement according to the wishes of the management was held "to have no force because the settlement had expired when the notice of strike was given." The last observation, reproduced below thus support the respondents contention:-- "(31)This also reiterates the position that a settlement is operative between the parties to the settlement for the period stated in the settlement and not beyond that period. We have therefore, nothing more to add to this clear and unequivocal position."
' For this view reliance was placed on 1986 PLC 113 quoted by the learned Commission in extenso.
(ii) Employees Union v. Fishermans Co-operative Society Limited Karachi (1975 PLC 357): In this case the age of superannuation was earlier fixed at 60 years, if an employee was physically found to be fit. It was later on altered to 55 years of age as the age of superannuation. It was held by the learned Sindh Labour Appellate Tribunal that at the time when Bashir Ahmed was made to retire on having attained the age of 55 years. Industrial Dispute No.57 of 1967 was pending disposal. The condition of service of Bashir Ahmed, therefore, could not be changed. The other fact noticeable in the case was that the age of 55 years was fixed by the Board of Directors of the respondent Society. It was observed by the learned Tribunal that the said resolution was not given retrospective effect. The learned Tribunal expressed its view that the said resolution applied only to those who were taken in service from the date that the resolution was passed. It is, however, noticeable that the facts of the instant case are different inasmuch as there was no fixed age of retirement prior to agreement, dated 2-8-1983 and that the agreement became operative and binding on the workers, existing as well as future, by virtue of section 39 of I.R.O. as also held in 1998 PLC 15, discussed supra.
(iii) Messrs Shabnam Silk Mills Karachi v. Khushi Muhammad (1979 PLC 129); In this case the only question which required consideration was whether the appellant retired on attaining the age of superannuation or as a result of victimization. Admittedly the respondent had been retired from service after attaining the age of superannuation. The learned Labour Court held that there was no proof that the appellant had fixed any age of superannuation whereas in the instant case it has been clearly established that the age of superannuation was fixed at 60 years by mutual settlement.
(iv) Services Mess (Formerly Services Club, Karachi v. Budha Khan (1993 PLC 371); In this case it was held that in absence of any provisions in law or rule, fixing age of retirement, employer would be free to determine age of retirement of employee but any Regulations fixing age of retirement after employment, would not be applicable to those employee who had been employed prior to framing of such Rules or Regulations. In the case cited, no age limit as to retirement was fixed at the time of the workers appointment. Subsequently the age of 60 years was fixed at the age of retirement by a resolution passed by the employer, it was thus held by a Division Bench of the High Court of Sindh that the resolution could not be binding on the worker as it was passed unilaterally subsequent to his appointment. This case, it may be noted came under consideration by another Bench of the same High Court, as referred to by the appellant's counsel reported as in Yaqub v. Mahboob Ali Qureshi (1998 PLC 15) and distinguished, as already referred. In the instant case, however, the age of superannuation was not fixed by the appellant unilaterally. It was fixed by mutual settlement protected under section 39 read with section 40(2) of I . R . O.
(v) Messrs A.E.G. Telefunken Pakistan (Private) Limited v. Sindh Labour Appellate Tribunal and 2 others (1989 PLC 525); ' It was a case where an employee was merged into new administration set up and that he would be governed by the rules of new administration. It went to the extent that they were less favourable then the rules and regulations under which he was governed in previous establishment.
(vi) Muller & Phips Pakistan Limited v. Muhammad Wasim Shaikh (1992 PLC 747); It was a case where the question of entitlement of payment of wages in accordance with first settlement which was granted by the Labour Court and confirmed by the Labour Appellate Tribunal was the main issue. This case (1992 PLC 747) has little relevance to the facts involved in the present case.
(vii) District Manager Karachi Transport Corporation v. Ghulam Younas and another (1992 PLC 761); It is a case decided by the Supreme Court of India wherein the age of superannuation was fixed by the Management unilaterally. It was held as not applicable to workmenwho had joined the service at a time when there was no age limit.
'6. Having considered the case-law cited by the learned counsel for the parties, as referred to above, there should be no cavil on the point that the unilateral act of the employer in finding certain age of retirement when there is no previous fixation of the age of retirement either by mutual settlement or Award, will not bind the workmen employed prior to unilateral fixation of the age of retirement by the employer. It may, however, be valid and binding on the workmen joining the service of employer subsequent to the fixation of age of retirement by the employer.
7. Reverting to the facts of the present appeals, it seems advantageous to reproduce para. 11 of the Agreement which is relevant to the point at issue:--
11. RETIREMENT:
(a) It is agreed that all such workers who, at the time of employment did not give a specific date of birth and only mentioned the year of birth, shall be retired from Company employment on 30th June of the year of retirement. It is agreed that for the purpose of determining retirement age, the date of birth recorded at the time of commencing employment shall be taken to be conclusive and final. However, such employees who were to be retired in 1983 shall be retired by 31st August, 1983.
(b) Workers will be retired from Company employment when they complete the age of 60 years or have completed 40 years of employment which ever is earlier."
8. As to the binding effect of the Agreement quoted above, section 39 has been rightly relied upon by the learned counsel for the appellant to support his contention that the said Agreement will be binding on all workmen including the respondent. The proviiions of law reads under:-- "(39) Settlement and awards on whom binding.-(1) A settlement arrived at in the course a conciliation proceedings or otherwise between the employer and the collective bargaining agent or any award, of arbitrator published under section 31, or an award or decision of a Labour Court delivered under section 37 or the decision of a Tribunal under section 38.
(a) be binding on all parties to the industrial dispute.
(b) be binding on all parties summoned to appear in any proceeding before a Labour Court as parties to the industrial dispute, unless the Court specifically otherwise directs in respect of any such party.
(c) be binding on the heirs, successors or assignees of the employer in respect of the establishment to which the industrial dispute relates where an employer is one of the parties to that dispute, and '(d) where a collective bargaining agent is one of the parties to the dispute, be binding on all workmen who were employed in the establishment or industry to which the dispute first arose or who are employed therein after that date;"
9. In view of the legal position, as stated above, the contention as advanced by the learned counsel for the respondent that retrospective effect cannot be given to the agreement so as to affect the rights of the respondents is fallacious, untenable in law and stands repelled. Now to decide the question of the enforcibility of clause (11) of the Agreement/settlement for retiring the respondents as it already stood expired, remains to be considered. Dealing with the question, besides the case- law cited at the Bar, reliance may be placed on an unreported decision, dated 27th February, 1968, of the Supreme Court, in Civil Appeals Nos. K-33 and K-34 of 1966. Siemens (Pakistan) Employees'
Union v. Siemens (Pakistan) Engineering Co. Limited (as referred to in 1986 PLC 113) on the interpretation of section 14(2) of the Industrial Disputes Ordinance, 1959, (analogous to subsection
(2) of section 40 of I.R.O.) rendered by Hamoodur Rehman, J. (A.R. Cornelius, C.J. S.A. Rahman, Fazl- e-Akbar and Muhammad Yaqub Ali, JJ., concurring). disagreeing with the view taken by the High Court that even where the period of subsistence of a settlement is agreed upon between the parties it would continue to be binding on the parties even after the expiry of the said period, until the expiry of two months from the date of a notice in writing of the intention to terminate the settlement, has been given by one of the parties to other party, observed that:-- "Upon the wording of the Legislation itself it is manifest that the Legislature was clearly making a distinction between the duration fixed by contract and the duration fixed by statute. In the case of a contract it is open to the parties to fix as long a period as they like as, indeed, the agreement of 1962 as in the present case done. It is to continue for period of ten years. But where this is not done the Legislature steps in and fixes a minimum duration subject to the right of the parties to determine thereafter by notice. The Legislature had in doing so acted equally consistently with another well-accepted principle that the right of the employer and employee to regulate their relationship by contract should be interfered with as little as possible. Thus, the law steps in only where the parties have failed to take provision by contract."
' It was, thus, held that:-- "Upon a plain reading of subsection (2) it appears to me that the intention of the Legislature clearly was to leave the parties to decide by themselves the period during which the settlement should be binding upon them but only where no such period had been fixed the Legislature thought it proper to fix minimum period of duration for the subsistence of the settlement so that during this minimum period some certainty is established and in the latter event since the Legislature had fixed only a minimum period, it was considered proper that the settlement should continue to be binding even after the expiry of that period until determined by a party unilaterally by the service of a notice. An agreement cannot be altered unilaterally.
' In the circumstances, I am unable to agree with the interpretations put upon the words of subsection (2) of section 14 of the Industrial Dispute Ordinance, 1959, by the High Court."
10. Reliance may also be placed on several other cases reported as (i) Trading Corporation of Pakistan Ltd., Karachi v. Employees Union 1974 PLC Note 76 at page 42; (ii) Workers Union v. The Trans Occeanic Steamship Co. Ltd. (1969 PLC 341) and (iii) Avalene Silk Mills v. Second Labour Court Karachi and 7 others 1981 PLC 4. (i) In the first case, named above, Mr. Inamullah Khan, J., who had been Chief Justice of the erstwhile High Court of West Pakistan, as a Chairman of Sindh Labour Appellate Tribunal, Karachi, agreeing with the submission of the learned counsel appearing in the said case observed that 'where the operation period of the settlement had been fixed by the settlement itself, no notice to determine the same is necessary. It is only case where no period is fixed by operation of law under section 40 of the Ordinance that it would be necessary to give a notice by the party who wishes not to be bound by it.
(ii) In the second named case. Industrial Court of West Pakistan relying on the unreported decision of the Supreme Court, already referred to above, held that the settlement arrived at between the parties lapses automatically after the expiry of the period mentioned therein and that no notice is required for its termination.
(iii) In the third named case, the parties had entered into a settlement for a period of one year. A learned Single Judge of this Court, as he then was, thus, observed that the agreement between petitioners and the workers, union has provided for gratuity to be given to the workers on resignation or in the event of death of any one of them to his heirs, was in force for only one year from 4-9-1972 to 3-9-1973. Under subsection (2) of section 40 of the Industrial Relations Ordinance, 1969 this Settlement was only binding till 3rd September, 1973.
11. The decision of the Dacca (Pakistan) High Court, 1972 PLC 190 stands overruled by the unreported decision of the Supreme Court of Pakistan in Siemen's case to the extent that it relates to section 40(2) of the Ordinance about mutual settlement fixing a period therein, as in the present case. The judgment reported in Siemens (Pakistan Employees' Union v. Siemens (Pakistan) Engineering Co.
Ltd., 1966 PLC 274 was challenged in appeal in the Supreme Court and was set aside by the aforesaid unreported judgment of the Supreme Court supra as referred to the 1986 PLC 113.
12. Here, the provisions of section 40(2) of I.R.O. 1969, as relied on by learned counsel for respondents seems to be relevant to the instant case. In order to appreciate its interpretation, the whole section 40 is reproduced below;
(40) Effective date of settlement, award, etc.-(1) Settlement shall become effective:--
(a) if a date is agreed upon by the parties to the dispute to which it relates, on such date; and
(b) if a date is not so agreed upon, on the date on which the memorandum of the settlement is signed by the parties.
(2) A settlement shall be binding for such period as is agreed upon by the parties, and if no such period is agreed upon, for a period of one year from the date on which the memorandum of settlement is signed by the parties to the dispute and shall continue to be binding on the parties after the expiry of the aforesaid period until the expiry of two months from the date on which either party informs the other party in writing of its intention no longer to be bound by the settlement.
(3) An award given under subsection (1) of section 37 shall, unless an appeal against it is preferred to the Tribunal, become effective on such date and remain effective for such period, not exceeding two years, as may be specified therein. The .Arbitrator, the Labour Court, or as the case may be. the Tribunal, shall specify dates from which the award on various demands shall be effective and the time limit by which it shall be implemented in each case: ' Provided that if, at any time before the expiry of the said period, any party bound by an award applies to the Labour Court which made the award for reduction of the said period on the ground that the circumstances in which the award was made have materially changed, the Labour Court may, by order made after giving to the other party an opportunity of being heard, terminate the said period on a date specified in the order.
(4) A decision of the Tribunal in appeal under subsection (3) of section 38 shall be effective from the date of award.
(5) Notwithstanding the expiry of the period for which an award is .to be effective under subsection (3), the award shall continue to be binding on the parties until the expiry of two months from the date on which either party informs the other party in writing of its intention no longer to be bound by the award."
13. It is thus pertinent to note that the phraseology used in subsection (5) of section 14 of Industrial Disputes Ordinance, 1959 (corresponding to subsection (5) of section 40 of the .I.R.O. of 1969) is quite similar to subsection (2) of section 40 subsection (5) provides that notwithstanding the expiry of the period for which an award is to be effective under section (3) the award shall continue to be binding on the parties until the expiry of two months from the date on which either party informs the other party in writing of its intention no more to be bound by the award. It may further be stated that section 40 of the I.R.O. is a composite section dealing with a number of things, namely, the commencement of settlement subsection (1), termination of settlement subsection (2). Again, the termination of settlement speaks of two situations (i) where the period is fixed by the settlement itself and (ii) where no period is fixed therein. Subsections (3) to (5) deal with the effective date of an award and its expiry.
Settlement and award belong to two different categories. Settlement is arrived at by free volition of the parties themselves, whereas an award is the decision of a third person imposed on the parties by statute. Subsections (I) and (2) dealt with settlement whereas subsections (3) to (5) dealing with an award are entirely different and of no avail to the facts of the present case.
14. And lastly I may now make a mention of a D.B. Judgment of the High Court of Sindh rendered by Tanzilur Rehman, J. (as he then was) reported as the Karachi Stevedores Conference Ltd. v. Sindh Labour Appellate Tribunal Karachi and 2 others (1986 PLC 113), for holding the view that a settlement, if period has been fixed therein, would come to an end on expiry of the said period.
15. I am therefore, of the firm view that the Agreement arrived at by and between the parties i.e. the appellant company and C.B.A. of its employees union on 2-8-1983 was no more in force on the expiry of the period of 2 years fixed therein. As a result thereof clause 11 of the Agreement relating to retirement was no more available to the appellant company and, therefore, the action of the appellant in retiring the respondents herein, was not in accordance with law, discussed above.
16. In result, the decision of the learned Labour Court No.III impugned in the above appeals is maintained. The appeals are consequently dismissed.
17. Before parting with the matter, I would like to add that the Government concerned may considered the advisability of initiating legislation to provide a fixed age of retirement, say, sixty years, of the workers/workmen of an Industrial/Commercial establishment/undertaking. In this respect, a proviso may be added in Standing Order No.12 of West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance 1968, which relates to termination of employment, as retirement in a sense is termination of employment.
' The above amendment is aimed at to bring uniformity and certainty in the matter. It will also curtail litigation.
' Let a copy of this judgment be sent to the Governor of Sindh, as the Governor's rule is currently in force in the Province.'