1990 PLP 650 (PLC)

4. After promulgation of the Act XIV of 1985, the C.B.A. demanded the payment of increase in the cost of living allowance and a settlement was arrived at between the parties on 25‑1‑1986. Tile relevant terms of the settlement are reproduced as under:‑ "(1) In the opinion of the management the allowance under the said Act is not payable to the workers for reason that it has already been set off following the signing of the agreement on 15th January 1985. Whereas in the opinion of the C.B.A. Union, the management, cannot set off the amount of settlement dated 15th January, 1985, as the said settlement was not due to increase in cost of living. (2) Without prejudice to the foregoing the management has agreed, as a gesture of goodwill, to pay a special interim allowance of Rs. 25 (Rupees twenty‑five only) with effect from Ist December, 1985, to all workers presently on company's Pay Roll. (3) Should the union or the company decide to apply to the Payment of Wages Authority/Labour Court/Tribunal or any statutory body for the interpretation of the agreement dated 15th January 1985, with regard to the said Act and if any statutory body orders that the C.L.A. under the said Act cannot be set off against any allowance then the management will pay the difference between the interim allowance and the amount payable under the said Act plus the arrear of interim allowance from 1st July, 1085, as per attendance of workers. (4) If any statutory body orders that the C.L.A. under the said Act can be adjusted against the allowances, then, the management will withdraw the interim allowance from the date such decision is announced. However, as a gesture of goodwill, Rs.25 per month will be added to the existing house rent allowance from the date of the interim allowance is withdrawn:

5. It may be pointed that the date of validity of this settlement was not fixed in the settlement itself.

6. I have heard Mr. Shafiq Qureshi, the learned Advocate for the applicants and Mr. Mahmood A. Ghani, the learned counsel on behalf of the respondents establishment.

7. Prior to the filing of this application, some of the workmen had attempted to get the increase in the payment of wages under Amending Act of 1975, by filing an application under section 15 of the Payment of Wages Act before the Authority appointed under the said Act. However, the learned Authority came to the conclusion that the settlement, dated 15‑1‑1985, required interpretation which could only be done by this Tribunal under section 50 of the I.R.O. 1909. In appeal, the learned Labour Court also held the similar view, vide its order dated 29‑11‑1988. Thereafter this application under section 50 of the I.R.O. 1969, was filed before this Tribunal on 29‑12‑1988.

8. The main objection raised by Mr. Mahmood A.Ghani, the learned Advocate regarding the maintainability of this application is that the applicants seek interpretation of an agreement which is no more in force and as such, no interpretation ought to be given of this settlement.

9. Mr. Mahmood A. Ghani, the learned Advocate for the respondent has relied upon the decision of this Tribunal in the case of Hostellarie‑De‑France Staff and Workers' Union v. Messrs Hostellarie‑De‑France, reported in 1983 P L C 1195. In this case the Tribunal has not held that the terms of the expired settlement cannot be interpreted but it had simply held that the "benefits conferred by the settlement after expiry of which an application under section 34, I.R.O., 1969 was filed could not be enforced for the period after expiry of the settlement itself. Reliance is also placed on 1981 P L C 4; where in the case of Avalene Silk Mills v. Sindh Labour Court, Karachi, a learned Single Judge of Karachi High Court had observed that the "claim to payment of gratuity on basis of settlement which has expired was not maintainable". It would be seen from the above case‑law that there is no bar on the Tribunal to interpret the terms of settlement even if the application is moved after expiry of the validity of the settlement but the only bar is that the benefits admissible under such settlement would not be admissible for the period after the expiry of the validity of such settlement. The instant case, however, is distinguishable. No doubt the settlement, dated 15‑1‑1985 did expire on 31‑12‑1985, but, another settlement was arrived at between the parties on 25‑1‑1986, under which certain demands of the C.BA. were partially acceded to by the management by awarding Rs 25 per month as interim allowance from 1‑7‑1985 and the management also undertook to pay the difference between the interim allowance and the amount payable under subsection (6) of the said Act if the union or the company decided to apply to any authority mentioned therein for the interpretation of the agreement, dated 15‑1‑1985 and if the authority ordered that Cost of Living Allowance under the said Act cannot be set off. This settlement is distinct and separate from the settlement, dated 15‑1‑1985.

10. Settlement is defined in section 2(xxiv) of I.R.O., 1969 as under:‑‑ "2(xxiv)‑‑`Settlement' means a settlement arrived at in the course of conciliation proceeding, and includes an agreement between an employer and his workmen arrived at otherwise than in the course of any conciliation proceeding, where such agreement is in writing, has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to the Provincial Government, the conciliator and such other person as may he prescribed."

11. Mr. Mahmood A. Ghani has contended that as copy of this settlement has not been sent to the Provincial Government as required under the definition of a settlement, it cannot be considered as a settlement. He was unable to point out any provision of law, which provides for consequences if a copy is not sent to the Government or to any other authority mentioned, therein. In my opinion, this clause of the definition of settlement is not mandatory but merely directory in order to safeguard the authenticity of the settlement in case there is a dispute to the existence or terms of the settlement. The mandatory requirements are that the settlement should be in writing, between the workmen and the employer and it should be signed by the parties. In the instant case there is no dispute about the parties entering into this agreement on 25‑1‑1986 and, therefore, even if the copy of same has not been sent to the Government, it would not be fatal. Furthermore, this provision also does not provide as to which of the parties has to send the copy of the settlement to the Government or the authorities mentioned therein. Ordinarily, it should be for the employer, who has got regular office and maintains record to submit such copy to the Government and others. Even if it was not sole duty of the employer, at least he is jointly responsible with the C.B.A. to send the copy to the Government. The failure to send a copy would either he due to sole negligence of the respondents or at least due to their, contributing negligence for which they cannot claim any benefit. In my opinion, settlement arrived at between the parties on 25‑1‑1986 is a settlement within the definition of the Ordinance and, therefore, binding upon the parties. As no date of validity is shown in this settlement, it would be governed by subsection (2) of section 40 of the I.R.O., 1969 which provides as under:‑ "(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." There is no evidence to show or even allegation, that any notice, as required, by this provision of law has been served by any party upon the other party.

12. Mr. Mahmood A. Ghani further submits, that this settlement should be read as a part of the original settlement, dated 15‑1‑1985, and it would also be deemed to have expired on the date, when the first settlement had expired. Reference may be made to the decision of this Tribunal in the case of Metropolitan Steel Corporation Workers Union v. Metropolitan Steel Corporation Ltd. reported in 1983 P L C 1023. In that case there was only one settlement, but, it provided different matters and dealt with different benefits and different dates on which benefits were effective. It was held that in fact this settlement would consist of separate settlements and the date of effectiveness each of them would be separate. In the instant case, there are 2 separate settlements entered into by parties on different dates. Under the first settlement, the benefits given thereunder were effective from 21‑9‑1984, whereas under the second settlement, the benefits are effective from 1‑7‑1985. Besides the second agreement refers to different benefits, which accrued to the workmen under subsection (6) of section 3 of the aforesaid Act. Therefore, these 2 settlements would be separate settlements. The second settlement contained no date of expiry and in the absence of notice under subsection (2) of section 40, I.R.O., 1969, it would continue to be binding upon the parties. Reference has been made to the first settlement, only for the purposes to determine by its interpretation whether the respondents could claim set off under the aforementioned proviso to subsection (6) for the benefits granted by them to the workers under 1985 settlement.

13. The next objection of Mr. Mahmood A. Ghani is that there is no ambiguity in the terms of first settlement of 1984 which would require any interpretation. Section 50 of the I.R.O., 1969 provides that if any difficulty or doubt arises as to the settlement or award, it shall be referred to the Tribunal for interpretation. Term No. 1 of the second settlement, dated 25‑1‑1986. which his been reproduced above clearly shows, that both the parties put different interpretations upon the settlement dated 15‑1‑1955, therefore, term No. 3 provided, that the union or the employer could approach the Tribunal or any other authority mentioned therein, for interpretation of the settlement, dated 15‑1‑1985, to determine whether the respondents could claim set off under Employees' Cost of Living (Relief) Amendment Act, 1985. Therefore, it cannot be said that no doubt or difficulty had arisen between the parties with regard to interpretation of the said settlement vis‑a‑vis, the said Amendment Act, 1985. The respondents had agreed under settlement, dated 25‑1‑1986 to refer the agreement, dated 15‑1‑1985 for interpretation and, therefore, they could not go back and say that no interpretation is required. Reliance is placed on a decision of this Tribunal in Application No. KAR‑451 of 1987, dated 24‑4‑1988, a copy of which has been produced by Mr. Mahmood A. Ghani. In that case, the applicant union had itself earlier claimed that it was not a matter of interpretation as there was no ambiguity in the settlement, therefore, the union was not allowed approbate and reprobate to claim that the settlement required interpretation, therefore, applications under section 50 was dismissed by this Tribunal.

14. Mr. Mahmood A. Ghani further submitted that in fact it would be an interpretation of law and not of the settlement, which this Tribunal could not interpret under section 50, I.R.O., 1969. Again, a reference may be made to the observations made by this Tribunal in Application No. 449 of 1981, decided on 13‑10‑1981, in the case of Prince Glass Works Ltd. v. Prince Glass Workers Welfare Union. On a similar objection, this Tribunal had observed, as under:‑ "It may, however, be pointed out that the provisions of a settlement or an agreement are not to be construed in isolation or in vacuum but with reference to the law which is applicable to the same. If a law declares that certain provisions of an agreement are void, unreasonable or can only be enforced under certain conditions, then, such agreements must be construed in the light of the said law."

15. Now I would proceed to interpret the aforementioned terms of the settlement, dated 15‑1‑1985. Admittedly, this settlement does not expressly provide that increase in allowances is due to increase in cost of living. Mr. Mahmood A. Ghani, however, contends that there was no reason to increase the allowances, but, the only consideration that prompted the management to increase the allowances was the increase in cost of living. In his support, he has filed affidavit‑in‑evidence of Mr. S.H. Zahid, General Manager of the respondents‑company. The applicants, in rebuttal, had also filed counter‑affidavit of Mr. Ihsan Illahi, General Secretary of the applicant union. I would advert to these affidavits later. As pointed the settlement does not mention that the increase in allowances was due to increase to the cost of living. The clauses of the proviso to subsection (6), reproduced above, clearly show, that the management could claim set off only if they had given benefits to the workmen to increase in cost of living. Mr. Mehmood A. Ghani in this context had relied upon the decision of this Tribunal in the aforementioned application of Prince Glass Works. However, in that settlement, the clause with regard to increase in wages clearly showed that the increase was made due to increase in the cost of living. Such recitation was also embodied in the previous settlements between the workers union and the employers and, therefore, this Tribunal came to the conclusion, that even the increase of other allowances would be due to increase in the prices of various items. Obviously, the present case is distinguishable as there is no such recitation in the settlement. There were earlier settlements of 1978 and 1982, between the parties, the copies of which have been produced by the respondents alognwith their objections. Both these settlements, in the end contain a para. with the heading "Compounding of benefits", which is as under:‑ "Compounding of benefits.‑‑ The benefits covered under this Agreement will not be compounded with (in addition to) similar ones stipulated by law or which may be introduced by the Government through legislation or otherwise during the course of this agreement, should, however, such an enforcement be implemented, the company's additional obligation, if any, will be to remove the differences between the benefits to be provided by legislation or Government action and the benefits provided under the agreement, in favour of the workmen. In other words no legislated or enforced benefits will be in addition to the similar ones provided or covered by this agreement."

16. However, it will be noted that this paragraph is conspicuously absent in the present settlement between the parties. In the previous 2 settlements, there was increase in practically all the allowance demanded by the workers including annual increment. In the instant settlement, many, of the demands were withdrawn by the union including the demand for the increase in the salary, but some increase was made in the House Rent allowance, conveyance allowance and canteen allowance only. It may also be pointed that in the charter of demands which has also been produced alongwith the application, there is no mention that the demands were made because of the increase in cost of living. Mr. Shafiq, Qureshi, the learned Advocate has relied upon the decision of this Tribunal in the case reported in 1976 P L C

230. In that case, wages were increased in terms of the settlement for a particular category of workers and it was held by this Tribunal that "benefits which were neither specifically demanded or granted on account of increased cost of living nor allowed indiscriminately to all workers, are not adjustable towards allowance granted under Employees' Cost of Living (Relief) (Amendment) Act, 1974". In 1978 P L C at 525, it was held that the "amount granted in settlement specially for higher cost of living in Karachi cannot be treated as granted on account of general cost of living prevailing in the country and so not adjustable toward allowance sanctioned by Act of 1974". He also relied upon the decision of Division Bench of Sindh High Court in the Constitution Petition No. D‑448 of 1982 in the case of Rasheed Textile Mills Ltd. v. Rasheed Textile Mills Azad Mazdoor Union and others, where it was held that when two interpretations were possible, one, which favours the workmen is to be preferred over the one which favours the employer as it was called upon to interpret beneficial enactment enacted for the benefits of the Labour class. In 1975 P L C 717, in the case of Kohinoor Chemical Company Ltd. and 4 others v. Workers' Union, this Tribunal had observed that "where settlement did not indicate specifically whether such increase was allowed on account of rise in cost of living, the question whether intention was to do so on account of cost of living so as to make such increase adjustable in increase of wages and dearness allowance allowed by Employees' Cost of Living Ordinance, 1974, not a matter of interpretation under section 50, but, a matter involving ascertaining of intention of parties, which was not possible without assessing implications of all relevant documents. It was to be resolved by Labour Court under section 34, I.R.O., 1969." Similar view was taken by this Tribunal in the case of Volkart (Karachi) Staff Union v. Volkart (Pat.) Ltd. reported in 1979 P L C

142. In the case of Oil & Gas Development Corporation Karachi v. Punjab Labour Court, Central Zone, Lahore reported in 1975 S C M R 485, it was observed by their Lordships that "no award made in case nor any difficulty or doubt arising about interpretation, section 50, was not applicable so as to give jurisdiction in matter to Labour Tribunal only". In the case of National & Grindlays Bank Employees' Union v. Sindh Labour Appellate Tribunal, reported in P L D 1975 Kar. 754, it was observed that 'jurisdiction of Tribunal under section 50 was limited to interpreting an award or a settlement in case of any difficulty".

17. I have pointed that under settlement, dated 25‑1‑1986, parties found difficulties and doubts while interpreting settlement, dated 15‑1‑1985, as to whether the increase in allowance under the settlement of 1985 was due to increase in cost of living which could be set off against the cost of living allowance allowed under the amending Act, 1975. Mr. Mahmood A. Ghani has relied on the case of Liberal Union (C.BA.), Karachi v. Messrs Pakistan Machine Tool Factory Ltd., Karachi, reported in 1986 P L C 820, this Tribunal has held that "settlement providing that any monetary benefit, granted by Government will be allowed to employees, Government granting Dearness allowance vide Finance Division O.M. dated 17‑6‑1982, no ambiguity and the interpretation sought for was not competent. In the instant case, there is no such provision in the settlement itself.

18. Reliance is also placed by the respondents on the case of R.B. Industries Ltd. v. Employees' Welfare Union, reported in P L D 1983 S C

15. In that case one of the demands provided that any concession/relief allowed by the Government in future will have no effect on terms of settlement between parties and appellants employers were bound to give effect to such privileges but this demand was withdrawn by respondents workers union. The respondents having withdrawn such condition, therefore, their Lordships had held that respondents cannot be permitted to argue that intention of parties had been to provide for a normal increase in wages unconnected with considerations relating to rise in cost of living." This case obviously is distinguishable as from the withdrawal of the said demand, their Lordships had construed, that the financial benefits conferred by settlement, in question, intended to provide relief due to rise in cost of living, adjustable against additional cost of living allowance granted by Amending Act." In the instant case, the settlement, dated 15‑1‑1985, did not specifically provide, that increase in certain allowance granted therein was due to increase in the cost of living. The charter of demands also does not show that the demands were made due to increase in cost of living. If the demands had been made due to increase in the cost of living, the workmen would not have withdrawn their demand regarding the increase in the wages. The settlement, dated 25‑1‑1986, clearly shows that there was doubt in the minds of the parties with regard to interpretation of the settlement of 1985, as to whether the increase in the allowances made therein could be set off against the increase in the cost of living allowed under the Amending Act, 1985, and further more under second settlement, they agreed to pay Rs.25 as further interim relief. If the intention of the respondents under settlement of 1985, had been to increase the allowances due to increase in the cost of living so as to entitle them to the set off they would not have given additional relief of Rs.25 per month. In both the settlements, stress is upon maintaining industrial peace. The increase in the allowances under 1985 settlement appears to be granted for the purpose of maintaining industrial peace so as to avoid any possibility of strike by the workmen. Under 1986 settlement, the parties had agreed to refer the matter to the Tribunal for interpretation of the settlement of 1985. It may be pertinent to refer to the explanation to subsection (5) of section 3 of the Employees' Cost of Living (Relief) Act, 1973, which reads‑ "for the purposes of this subsection, subsection (6) and subsection (7) any increase in wages accruing by virtue of the usual increment or promotion to a higher grade, or an allowance not specifically given to provide relief due to a rise in the cost of living, shall not be deemed to be an increase intended to provide relief due to a rise in the cost of living." Word "specifically" used in the explanation was considered by this Tribunal in the case of Employees Union v. Grindwheel (Pak.) Ltd. reported in 1982 P L C 790 and it was held that "expression `specifically' given, means paid specifically to provide relief due to rise in cost of living and not essentially as `expressly mentioned'. Where such payment was made, but, not expressly mentioned, that it was to provide relief due to rise in cost of living, employer entitled to adjustments provided he proves payment having been made for such purpose". In that case, settlement provided that increase in house rent allowance and conveyance allowance was made keeping in mind rise in cost of living. Therefore, such increase in the payments under settlement were held to be subject to set off. In the case of New Jubilee Insurance Company Ltd. v. District Judge, Karachi and 3 others, reported in 1981 P L C 566, which is a Division Bench decision, their Lordships considered the significance of word `specifically mentioned' under section 8 which is similar to the expression under subsection (5) reproduced above. Their Lordships have observed as under:‑ "The explanation to section 8 does not provide a form to express the nature and purpose of payment in a settlement or a document. It merely clarifies that if the employer wants to adjust any allowance, then, it should be clearly established that it was specifically paid to provide relief due to rise in cost of living. In such a situation if there is any ambiguity the benefits will be given to the workers and the employer will not be entitled to the benefits of adjustment. If the purpose of granting such increase is not clear from the agreement itself then the Court is empowered to look into the facts and circumstances and also to consider the evidence subject to the rules of evidence to determine the intention of the parties, whether the payment was intended to be made to provide relief due to rise in the cost of living."

19. Mr. Mahmood A. Ghani has relied upon the decision of the Single Judge of Sindh High Court in the case of Pakistan Tobacco Co. Ltd. Karachi v. Pak. Cigarette Labour Union and another reported in P L D 1977 Kar. 586, where his Lordship had observed that "when intention of parties was not clearly spelled out from instrument, resort can be had to extrinsic evidence bearing on question outside instrument." Mr. Mahmood A. Ghani, therefore requested that respondents be allowed to produce oral evidence by filing affidavit‑in‑evidence. This decision of his Lordship was not in a case of interpretation under section 50.

20. Admittedly nowhere in the settlement of 1985, it is mentioned that any increase in allowances had been given either due to or keeping in view the increase in cost of living or in the prices of the commodities. The primary rule of construction, as enunciated by Maxwell on the Interpretation of Statutes, Twelfth Edition by P.St.J. Langan at page 28 is the literal construction of the Statute‑‑"If there is nothing to modify, alter or qualify the language which the statute contains, it must be construed in the ordinary and natural meaning of the words and sentences. The safer and more correct course of dealing with a question of construction is to take the words themselves and arrive if possible at their meaning without, in the first instance, reference to cases." The Golden Rule of Construction, enunciated by the same Author at page 43 is‑‑"It is a very useful rule in the construction of a statute, to adhere to the ordinary meaning of the words used, and to the grammatical construction, unless that is at variance with the intention of the legislature, to be collected from the statute itself, or leads to any manifest absurdity or repugnance, in which case the language may be varied or modified, so as to avoid such inconvenience, but no further." The same principles would be applicable to the interpretation of the document viz., settlement.

21. While constructing statute preamble is generally looked into for the purpose of ascertaining the intention of the Legislature. The Charter of Demands which was the basis of the negotiation between the parties leading to the settlement in question, can be looked into on the same analogy for the purpose of intention of employer in allowing the increase under settlement. Even, in these demands, the workers did not claim the increase due to increase in the prices or in the cost of living. I have already pointed, that the condition in the previous settlement with regard to adjustments which has been reproduced under the heading `Compounding Benefits' is missing in the settlement, in question. All these circumstances and the wordings of the settlement itself clearly show, that the increase granted under settlement, in question, in some allowances of the workers was not specifically allowed due to increase in the cost of living or in the increase in prices of various commodities.

22. In view of the fact, that the intention of the parties can be ascertained from the surrounding circumstances as well as from the wordings of the settlement, it will not be helpful or proper to allow the parties to lead oral evidence, after 4 years of the signing of the settlement with regard to the intention of the respondents in granting increases in some allowances under the settlement. in question.

23. In view of the above discussion, I am of the considered opinion that increase in the allowances made under 1985 Settlement, was not due to increase in cost of living and, therefore, not subject to set off under the proviso to subsection (6). The application is disposed of in the above terms. M.Y.H./1519/Lb. S Petition disposed of.