Settlements Entered U/S 12(3) Of Industrial Disputes Act Are Not Administrative Conveniences: Supreme Court
The Supreme Court in its recent Judgment, observed that the settlements entered under Section 12(3) of the Industrial Disputes Act, 1947 (IDA) are not administrative conveniences.
The Court observed thus in a Civil Appeal preferred against the Judgment of the Telangana High Court, which allowed the Writ Appeal of the Telangana State Road Transport Corporation (TSRTC) and set aside the Single Judge’s Judgment directing to provide an alternate employment.
The two-Judge Bench of Justice J.K. Maheshwari and Justice Aravind Kumar clarified, “Settlements entered under Section 12(3) of the Industrial Disputes Act are not administrative conveniences. They are quasi-statutory instruments reflecting negotiated justice, and they bind both employer and employee with the force of law. Where such settlements create specific entitlements, courts must give them purposive effect, unless expressly rescinded or demonstrably superseded. Their terms are not to be overridden by internal policy or circulars issued in contravention thereof.”
The Bench said that in industrial law, a beneficial provision in a prior settlement cannot be deemed overridden unless there is an express revocation or contradiction.
Senior Advocate C. Mohan Rao appeared for the Appellant while Senior Advocate Satyam Reddy Sarasani appeared for the Respondents.
Court’s Observations
The Supreme Court in view of the facts and circumstances of the case, noted, “… the 1986 clause is general in nature, addressing medically unfit drivers as a class. The 1979 clause is specific, dealing solely with colour blindness. Applying the principle of generalia specialibus non derogant [A general provision does not override a specific provision]the 1979 clause continues to govern the case of colour-blind drivers. The absence of a termination clause in the 1986 settlement, coupled with the Corporation’s continued adherence to Clause 14 in other cases even after 1986, confirms that the earlier agreement remained operational. Accordingly, we find that 1986 settlement does not explicitly abrogate or nullify Clause 14 of the 1979 settlement.”
The Court added that the Corporation’s internal circulars which purport to deny alternate employment to colour-blind drivers and limit them to Additional Monetary Benefit (AMB), are administrative in nature and cannot override the binding effect of a statutory settlement under Section 12(3).
“Therefore, the Respondents’ reliance on internal instructions in disregard Clause 14 is both procedurally and substantively invalid”it further said.
The Court also remarked that it is not only vindicating the Appellant’s rights but also reaffirming its Constitutional commitment to a just and humane employer-employee relationship.
The Court noted that the Appellant was prematurely retired from service on medical grounds without any meaningful effort by the Respondent–Corporation to explore his suitability for alternate employment and this action, taken in disregard of Clause 14 of the binding MOS, and without adherence to principles of fairness or accommodation, cannot be sustained in law.
“The Corporation’s omission to consider redeployment violates both statutory and constitutional obligations. Settled jurisprudence, including Kunal Singh (supra), which mandates that an employee who acquires a disability during service must be protected through reassignment where possible. The duty to reasonably accommodate such employees is now part of our constitutional fabric, rooted in Articles 14 and 21”it emphasised.
Conclusion
Moreover, the Court said that while judicial restraint guards against overreach, it must not become an excuse for disengagement from injustice and when an employee is removed from service for a condition he did not choose, and where viable alternatives are ignored, the Court is not crossing a line by intervening, it is upholding one drawn by the Constitution itself.
“The employer’s discretion ends where the employee’s dignity begins”it concluded.
Accordingly, the Apex Court allowed the Appeal, set aside the impugned Judgment, and directed the Respondent to appoint the Appellant to a suitable post, consistent with his condition and on the same pay grade as he held, within 8 weeks, and held that the Appellant shall be entitled to 25% of the arrears of salary, allowances, and benefits from the date of his termination to the date of reinstatement.
Cause Title- Ch. Joseph v. The Telangana State Road Transport Corporation & Others (Neutral Citation: 2025 INSC 920)