As per case facts, petitioners, former workmen of respondent company, sought unpaid wages and statutory dues from June to November 1999, arguing they were still employees after a November 1999 ...
wp-632-2010 with connected-J.doc
Shabnoor
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.632 OF 2010
1.Tulshiram T. Patil,
Age about 60 years, residing at
Mohar Pada, PO Kasrvadavali,
G.B. Road, Thane
2.Parsnath Yadav,
Age about 51 years,
Ramraj Yadav Chawl, Karvalo Nagar,
J.K. Gram, Thane.
3.Ramchandra Mourya,
Age 48 years, Vijayki Chowk,
Azad Nagar No.2, Thane
3.Dattatraya Vaidya,
Age about 53 years,
10, Anysaya Apartment,
Charai, Thane. … Petitioner
V/s.
1.Wellman Hindustan Limited,
Kolshet Road, Thane (Notice to be
served at 21-B, Urvashi,
Napeansea Road, Mumbai)
2.Vinod Kumar Mehra, Director,
Wellman Hindustan Limited,
having office at Neville House,
Currimbhoy Road, Ballard Estate,
Mumbai (Notice to be served at
21-B, Urvashi, Napeansea Road,
Nashik.
1
SHABNOOR
AYUB
PATHAN
Digitally signed by
SHABNOOR AYUB
PATHAN
Date: 2026.02.24
12:14:30 +0530
wp-632-2010 with connected-J.doc
3.Kamgar Ekata Union, a trade union
registered under the Trade Unions
Act, 1926, having its office at
C/o. 31, Siddharth Nagar, Kalva,
Thane (Notice to be served at
Mumbai-Pune Highway, Manisha
Nagar, Kalwa, Thane 400 608
4.Wellman Employees Trade Union,
also a trade union registered under
the Trade Unions Act, 1926, having
its office at C/o. Wellman Hindustan
Ltd., Kolshet Road, Thane
5.J.P. Limaye, Member,
Industrial Court, Maharashtra
at Thane … Respondents
WITH
WRIT PETITION NO.14112 OF 2022
Gangaya Moolya,
Age about 64 years,
Room No.C-108, First Floor, Tirupati
Housing Society, Near Ambar Hotel,
Sahad (West), District Thane… Petitioner
V/s.
1.Wellman Hindustan Limited,
Neville House, Ballard Estate,
Fort, Mumbai 400 001
2.Wellman Hindustan Limited,
Kolshet Road, Thane (Notice to be
served at 21-B, Urvashi,
Napeansea Road, Mumbai)
3.Vinod Kumar Mehra, Director,
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Wellman Hindustan Limited,
having office at Neville House,
Currimbhoy Road, Ballard Estate,
Mumbai (Notice to be served at
21-B, Urvashi, Napeansea Road,
Nashik.
4.Kamgar Ekta Union, a trade union
registered under the Trade Unions
Act, 1926, having its office at
C/o. 31, Siddharth Nagar, Kalva,
Thane (Notice to be served at
Mumbai-Pune Highway, Manisha
Nagar, Kalwa, Thane 400 608
5.Wellman Employees Trade Union,
also a trade union registered under
the Trade Unions Act, 1926, having
its office at C/o. Murtiram Joshi,
Manorama Nagar, Plot No.4,
Shivsena Shakha, Kolshet Road,
Thane.... Respondents
WITH
WRIT PETITION NO.4469 OF 2019
1.Shankar Gangaram Dike,
Age about 58 years, Panchamrut
Apartment, 4th Floor, Room No.403,
Lakmanya Nagar, Pada No.4,
Thane (West)
2.Prakash Kruparam Alai,
Age about 47 years,
Plot No.18, D.I. Priyadarshani CHSL,
Sarkar Nagar, Thane (West)… Petitioners
V/s.
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1.Wellman Hindustan Limited,
Kolshet Road, Thane (Notice to be
served at 21-B, Urvashi,
Napeansea Road, Mumbai)
2.Vinod Kumar Mehra, Director,
Wellman Hindustan Limited,
having office at Neville House,
Currimbhoy Road, Ballard Estate,
Mumbai (Notice to be served at
21-B, Urvashi, Napeansea Road,
Nashik.
3.Kamgar Ekta Union, a trade union
registered under the Trade Unions
Act, 1926, having its office at
C/o. 31, Siddharth Nagar, Kalva,
Thane (Notice to be served at
Mumbai-Pune Highway, Manisha
Nagar, Kalwa, Thane 400 608
4.Wellman Employees Trade Union,
also a trade union registered under
the Trade Unions Act, 1926, having
its office at C/o. Murtiram Joshi,
Manorama Nagar, Plot No.4,
Shivsena Shakha, Kolshet Road,
Thane.
5.S.K. Deshpande, Member,
Industrial Court, Maharashtra
at Thane … Respondents
WITH
WRIT PETITION NO.6524 OF 2013
1.Pandarinath Babu Mhatre,
having address at Diva, Post Anjur,
Taluka Bhiwandi, District Thane.
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2.Shukarnath Ganpat Mhatre,
having address at Diva, Post Anjur,
Taluka Bhiwandi, District Thane… Petitioners
V/s.
1.Wellman Hindustan Limited,
Kolshet Road, Thane (Notice to be
served at 21-B, Urvashi,
Napeansea Road, Mumbai)
2.Vinod Kumar Mehra, Director,
Wellman Hindustan Limited,
having office at Neville House,
Currimbhoy Road, Ballard Estate,
Mumbai (Notice to be served at
21-B, Urvashi, Napeansea Road,
Nashik.
3.Kamgar Ekta Union, a trade union
registered under the Trade Unions
Act, 1926, having its office at
C/o. 31, Siddharth Nagar, Kalva,
Thane (Notice to be served at
Mumbai-Pune Highway, Manisha
Nagar, Kalwa, Thane 400 608
4.Wellman Employees Trade Union,
also a trade union registered under
the Trade Unions Act, 1926, having
its office at C/o. Murtiram Joshi,
Manorama Nagar, Plot No.4,
Shivsena Shakha, Kolshet Road,
Thane.… Respondents
Mr. K.P. Anil Kumar with Jayshree Kumar, Amit Sadle
and Priyanka Kumar for the petitioners in WP/632/
2010 & W/P6524/2013.
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Mr. G.R. Naik with Uresh U. Sawant, Rutika Naik i/by
M/s. G.R. Naik & Co., for the petitioners in WP/4469/
2015 & WP/14112/2022.
Mr. Prashant C. Pavaskar for respondent No.1.
Mr. Gaurav Shrivastav along with Nikita Vardhan and
Srushtee Panhale i/by Kanga & Co., for respondent
No.2 in WP/632/2010.
CORAM :AMIT BORKAR, J.
RESERVED ON :JANUARY 30, 2026
PRONOUNCED ON:FEBRUARY 24, 2026
JUDGMENT:
1.By the present petition under Article 226 of the Constitution
of India, the petitioners call in question the legality and
correctness of the judgment and order passed by the Industrial
Court, Maharashtra at Thane in Complaint (ULP) No.181 of 2008.
By the said order, the Industrial Court dismissed the complaint
preferred by the petitioners under the MRTU and PULP Act and
consequently rejected their claim for wages for the period from
June 1999 to November 1999.
2.According to the petitioners, respondent No.1 company was
engaged in the business of processing wool at its factory situated
at Thane. It is their case that the company discontinued its
operations and proposed to dispose of its factory land admeasuring
about 8.33 acres along with plant and machinery, the total value of
which was stated to be approximately Rs.125 crores. At the
relevant time, about 445 employees were in service, whose names
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are set out in Exhibit ‘A’, and who were stated to be permanent
workmen of respondent No.1.
3.The petitioners instituted Complaint (ULP) No.181 of 2008
alleging commission of unfair labour practices under Item No.9 of
Schedule IV of the Maharashtra Recognition of Trade Unions and
Prevention of Unfair Labour Practices Act, 1971. In the complaint,
they sought recovery of unpaid wages and other statutory dues
from respondent No.1. They also alleged that the payments made
towards statutory benefits were short and not in accordance with
law. It is the case of the petitioners that although they were earlier
members of a recognised union, they lost confidence in the said
union and tendered their resignations from its membership in the
year 1999. Thereafter, according to them, they were not members
of any recognised union nor were they represented by any
common union. They contend that wages for the period from June
1999 to November 1999 were not paid to them.The petitioners
further state that on 16 November 1999, respondent No.1
displayed a notice on the factory notice board informing the
workmen that they need not report for duty until further
instructions and assuring them that their services would remain
protected. The notice also indicated that unpaid wages would be
disbursed as and when the company’s financial position permitted.
It is further stated that respondent No.1 approached the Board for
Industrial and Financial Reconstruction by filing Case No.61 of
1988 seeking to be declared a sick industrial company. The BIFR
passed an order under Section 20(1) of the Sick Industrial
Companies Act directing winding up of the company. Though the
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said order was subsequently set aside, and the matter remanded,
respondent No.1 made a statement before the BIFR that it would
not dispose of its assets. The petitioners allege that
notwithstanding the subsistence of the winding up order,
respondent No.1 entered into a settlement dated 31 March 2005
with respondent No.4 employees’ union. Under the terms of the
settlement, each employee was paid an advance amount of
Rs.10,000, with an assurance that the remaining dues would be
cleared upon sale of the Thane unit land and machinery. The
petitioners assert that they were neither members of respondent
No.4 union nor parties to the said settlement.
4.It is further alleged that pursuant to the settlement dated 31
March 2005, certain active members of respondent No.4 union
took the petitioners in groups to the company’s head office,
confined them in a room and obtained their signatures on various
documents, blank papers and printed forms before disbursing the
advance of Rs.10,000/-. The petitioners, claiming to be illiterate
workmen, contend that they were unaware of the contents and
nature of the documents on which their signatures were obtained.
The petitioners state that during the period from September 2006
to July 2008, they received cheque payments said to be towards
the balance statutory dues along with interest. Upon receipt of the
final amounts, they claim to have realised that the payments were
less than what was legally payable and that there was a shortfall in
statutory dues. On 21 April 2008, they addressed a communication
to respondent No.1 recording their protest regarding the manner
in which their signatures were obtained and disputing the
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computation of their dues. Thereafter, they filed Complaint (ULP)
No.181 of 2008 seeking recovery of the differential amounts.
5.Respondent No.1 filed its written statement opposing the
complaint. It was contended that the complaint was barred by
limitation and that the persons who instituted it lacked proper
authorisation. It was further contended that the petitioners had
voluntarily resigned and, therefore, ceased to be employees within
the meaning of the MRTU and PULP Act. Respondent No.1
asserted that all legal dues were paid in terms of the settlement
dated 31 March 2005 executed with respondent No.4 union, which
settlement was later modified by a corrigendum dated 21 June
2007. Respondent No.1 also pleaded that owing to severe financial
difficulties since 1998, an understanding was arrived at with the
recognised union for deferred payment of wages. As the financial
position did not improve, respondent No.1 approached the BIFR
on 15 May 1998. By order dated 6 November 2006, the BIFR
directed winding up of the company, which order was
subsequently set aside by the Appellate Authority. It was further
contended that under the settlement dated 31 March 2005, all 445
employees stood relieved from service with effect from that date
and were paid their retirement benefits. Each workman received
Rs.10,000 in cash as advance and the remaining amounts were
disbursed by cheque in accordance with the settlement and the
corrigendum. Respondent No.1 also relied upon a subsequent
settlement dated 20 June 2006 entered into with the recognised
union and asserted that all 318 petitioners were governed by the
said settlements.
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6.The Industrial Court framed the necessary issues arising for
determination, permitted the parties to lead oral and documentary
evidence and, after hearing both sides, dismissed the complaint.
Aggrieved thereby, the petitioners have invoked the writ
jurisdiction of this Court by filing the present petition.
7.Mr. Anil Kumar, learned Advocate appearing for the
petitioners in Writ Petition No.632 of 2010, and Mr. Naik, learned
Advocate appearing for the petitioners in the remaining two
petitions, submitted that although the petitioners tendered their
resignations in April 2005 with effect from 31 March 2005, their
legal dues were calculated only up to May 1999. According to
them, the petitioners were entitled to wages and gratuity up to the
date of resignation. It was contended that the notice dated 16
November 1999, by which the workmen were directed not to
report for duty, was never withdrawn. Therefore, the petitioners
claimed entitlement to full legal wages from 17 November 1999
till 31 March 2005. In support of this submission, reliance was
placed on the decision in
Premier Automobiles Employees Union v.
Premier Automobiles Ltd.,
1995 III LLJ 840.
It was further
submitted that payment of legal dues to workmen partakes the
character of a right to livelihood and, therefore, falls within the
protective ambit of Article 21 of the Constitution of India. Though
a settlement between employer and workmen is permissible in law,
such settlement must conform to statutory requirements and
public policy and must satisfy the mandate of Section 23 of the
Indian Contract Act. It was contended that the basic pay was
incorrectly computed and that gratuity payable from 1999 till the
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date of resignation could not have been waived. The petitioners
further contended that the subsequent settlement dated 21 June
2006 is unenforceable in law. Learned Advocate for the petitioners
placed reliance upon the following decisions:
Warna Sahakari
Dudh Utpadak Prakriya Sangh Ltd. v. Tanaji Bapurao Telli,
2010 II
CLR 403;
The Premier Automobiles Employees Union v. The
Premier Automobiles Ltd.,
1995 III LLJ 840; Nar Singh Pal v. Union
of India,
2000 II CLR 15; Oswal Agro Furane Ltd. v. Oswal Agro
Furane Workers Union,
2005 I CLR 816; Warden & Co. (India)
Ltd., Bombay v. Akhil Maharashtra Kamgar Union, Thane,
2001 II
CLR 359;
and India Yamaha Motor Pvt. Ltd. v. Dharam Singh, 2014
(143) FLR 488.
8.Per contra, learned Advocate for respondent No.1 company
invited attention to Section 2(t) of the Industrial Disputes Act,
which defines “settlement”, and to Section 18(1) thereof, which
renders a settlement binding upon the parties to the agreement. It
was submitted that even a settlement arrived at otherwise than in
the course of conciliation proceedings is binding on the parties.
According to respondent No.1, the petitioners raised the present
dispute for the first time in July 2008, though they had accepted
payments as early as 2005 and 2007. It was pointed out that the
company had ceased operations since 1999. Payments were made
in three stages. First, an advance of Rs.10,000/- was paid.
Thereafter, full and final payments were made as per the
settlement. Subsequently, interest was also paid on delayed
payments. The concerned workers, including the complainants,
issued independent receipts acknowledging such payments.
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Learned Advocate for respondent No.1 drew attention to Clauses
(2) and (12) of the settlement dated 31 March 2005. Clause (2)
records that 442 workmen named in Annexure “A” agreed to
voluntary retirement and were to be paid full and final settlement
of all monetary and other claims, including gratuity, leave wages,
ex gratia and bonus, as specified in the annexure. The company
agreed to make payment not later than 30 December 2006 and, in
case of delay beyond 31 December 2006, to pay interest at 8
percent per annum on outstanding dues up to 30 June 2007. The
clause further stipulates that the agreement would stand
terminated if payments with interest were not made by 30 June
2007. Clause (12) provides that in view of the agreed payments,
neither the workmen nor the union would raise any future dispute
or demand against the company arising out of voluntary
retirement and that they would have no claim of any nature,
monetary or otherwise, including reemployment.
9.In response to the allegation of fraud, it was submitted on
behalf of respondent No.1 that no particulars of fraud were
pleaded or established in evidence. It was emphasized that the
settlement bore the signatures of 445 workmen and was not
confined to a few individuals. After execution of the settlement,
details of payments were displayed on the notice board and
objections, if any, were invited. Except for one or two individuals,
no grievance was raised. The petitioners issued receipts
acknowledging payments under the settlement dated 31 March
2005 and such receipts do not record that the amounts were
accepted under protest or without prejudice. Reliance was placed
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on the judgment of the Supreme Court in
Herbertsons Ltd. v.
Workmen of Herbertsons Ltd.,
(1976) 4 SCC 736, wherein it was
held that a settlement must be viewed as a package deal and,
where negotiations involve mutual concessions in the interest of
industrial peace, it cannot be dissected to challenge isolated terms
as unfair. Further reliance was placed on the decision of this Court
in
Sarva Shramik Sangh v. V.V.F. Limited & Anr., 2002 (93) Vol.2
Mh.L.J. 434, wherein it was held that a settlement arrived at
during conciliation proceedings is binding not only upon the
parties to the dispute but also upon the heirs, successors or assigns
of the employer and upon all workmen in the establishment.
Learned Advocate also relied upon the judgment of the Supreme
Court in
Man Singh v. Maruti Suzuki India Ltd. & Anr., (2011) 14
SCC 662. It was submitted that in the said case the Supreme Court
held that where an employee accepts full monetary benefits under
a voluntary retirement scheme, it is not open to him thereafter to
challenge the termination of service. It was contended that a
workman who retains the monetary benefits under such a scheme
cannot simultaneously pursue a dispute impugning the same
transaction. Reliance was further placed on the judgment in
HEC
Voluntary Retired Employees Welfare Society & Ors. v. Heavy
Engineering Corporation Ltd. & Ors.,
(2006) 3 SCC 708. It was
submitted that voluntary retirement accepted in terms of a scheme
results in a concluded contract between employer and employee.
Unless such contract is governed by constitutional or statutory
provisions, it is regulated by the principles of the Indian Contract
Act, both as regards formation and termination.
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REASONS AND ANALYSIS:
Employee status and entitlement to wages up to 31 March 2005:
10.Exhibit A contains the names of the petitioners as permanent
workmen of the establishment. That document has not been
disputed. Once a person is shown as a permanent employee, the
burden lies heavily on the employer to show how and when that
relationship came to an end. Employment must come to a close in
a manner known to law.
11.The company asserts that the petitioners had voluntarily
resigned prior to 31 March 2005. A resignation is a conscious act
by which a workman gives up his service. Such an act must be
proved by clear material. Normally, one would expect a written
resignation letter, acknowledgment by the employer, acceptance of
the resignation, and a record showing the date from which the
employee stood relieved. None of these documents have been
produced for the period prior to the 2005 settlement. There are no
resignation letters placed on record which predate the settlement.
There is also no evidence of full and final settlement having been
made at any earlier point of time.
12.The notice dated 16 November 1999 assumes importance. By
that notice, the workmen were told not to report for duty until
further orders. The notice also assured them that their
employment would be protected. That notice was not shown to
have been withdrawn. There is no subsequent communication
placed on record stating that services stood terminated or that the
workmen were discharged. In the absence of such material, the
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Court cannot presume termination. If the employer intended to
bring the relationship to an end, it was required to act in
accordance with law and place such action on record.
13.The company has also not produced any contemporaneous
record to show that the petitioners were re-employed elsewhere in
the establishment, transferred, dismissed for misconduct, or
retrenched in accordance with statutory procedure before 31
March 2005. There is no charge sheet. There is no retrenchment
notice. There is no order of termination. In these circumstances, it
is not possible to accept the plea that the petitioners had
voluntarily severed their service at an earlier point of time. The
mere fact that work had stopped or that the factory was not
functioning does not automatically snap the contract of
employment. A contract of employment continues unless it is
brought to an end in a manner recognized by law.
14.The position therefore is that the petitioners continued to
remain employees for the purpose of claiming wages and gratuity
unless one of two things happened. Either they voluntarily opted
for retirement under a lawful and binding scheme, or they
resigned in clear and unequivocal terms and such resignation was
accepted. Neither situation has been established for the period
prior to the settlement of 2005. The display of a notice asking
workmen not to report for duty cannot, by itself, amount to
termination. An employer who intends to terminate must follow
statutory safeguards. If the termination amounts to retrenchment,
compliance with the Industrial Disputes Act is mandatory. If it is
dismissal for misconduct, due process must be followed. None of
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these steps are shown here.
15.On a careful reading of the evidence and documents, I am
satisfied that the petitioners remained in service in the eye of law
until they validly accepted the settlement of 2005. Till that point,
they retained the character of employees and were entitled to
claim wages and statutory benefits, subject of course to the effect
of any lawful settlement entered into thereafter.
Legal effect of the 16 November 1999 notice:
16.A notice asking workers not to report for duty is, on its face,
a suspension of work. The notice also stated employment would be
protected and unpaid wages would be paid when funds permit.
That language supports the petitioners’ case that they were not
dismissed then. The company followed with BIFR proceedings and
financial distress. BIFR orders and statements to BIFR that assets
would not be alienated are relevant background. They do not, by
themselves, relieve the company of its statutory obligations to pay
wages and gratuity. The 16 November 1999 notice did not amount
to a clear termination that extinguished the petitioners’ right to
wages and gratuity. It created a condition of non-working with a
promise of protection. That promise gives the petitioners the right
to claim wages and statutory benefits unless they validly agreed
otherwise later.
Validity and binding effect of the 31 March 2005 settlement and
corrigendum:
17.Sections 2(t) and 18(1) of the Industrial Disputes Act make
the legal position clear. A “settlement” means an agreement
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between the employer and the workmen arrived at either in the
course of conciliation or otherwise. Once such a settlement is
entered into, it binds the parties who are signatories to it. The law
recognises that industrial disputes are often resolved through
negotiation. When both sides agree upon terms and act upon
them, the Court does not lightly disturb that arrangement.
18.Clause 2 of the settlement dated 31 March 2005 states in
clear words that 442 named workmen, whose names are set out in
Annexure A, would stand relieved on voluntary retirement and
would receive full and final settlement of all their monetary claims
as detailed in the annexure. It includes gratuity, leave wages, ex
gratia and other dues. Clause 12 goes further. It records that once
the agreed amounts are paid, neither the workmen nor the union
would raise any future dispute arising out of the voluntary
retirement. In substance, the document treats the matter as finally
concluded. In view of these clauses, two central questions arise.
Did the petitioners in fact agree to this settlement. If they did, can
they now avoid it on the ground that their consent was not free.
19.The company has produced material to show that payments
were in fact made to a large number of workers. Receipts
acknowledging the payments are on record. Statements of
payment were displayed on the notice board. The evidence shows
that, at the relevant time, there was no large scale protest. Except
for a few individuals, no formal grievance was recorded
immediately after payment. These surrounding circumstances
indicate that the settlement was implemented and acted upon by
most of the workforce.
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20.The petitioners contend that they were not members of the
union that negotiated the settlement. They allege that they were
taken in groups to the company’s office, made to sit in a room and
compelled to sign papers without being told what those papers
contained. They say they are illiterate and did not understand the
contents. According to them, their consent was not lawful.
21.The law on this point is settled. A settlement must be
voluntary. Consent must be free. If a person signs a document
because of fraud, coercion or misrepresentation, the agreement
can be avoided. At the same time, fraud is not to be presumed. It
must be pleaded clearly and proved with specific facts. A general
statement that signatures were obtained by force is not enough.
The Court must see details.
22.In the present case, the pleadings contain an allegation of
fraud, but the particulars are absent. The evidence led in support
of this plea is also not convincing. No independent witness has
come forward to say that the petitioners were confined or
threatened. No complaint was lodged immediately after the
alleged incident. The receipts issued at the time of payment do not
record that the amounts were received under protest. They do not
contain any endorsement reserving rights. If a workman truly
believed that his signature had been obtained unfairly, one would
expect some immediate objection, at least in writing.
23.The Court must look at the entire picture. The settlement
was signed by a large number of workers. Payments were made in
stages. Interest was also paid in case of delay. The petitioners
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accepted the amounts and issued receipts. There is no
contemporaneous material showing protest at the time of
execution. On the face of the record, therefore, the settlement
dated 31 March 2005 appears to be a bona fide industrial
settlement arrived at to resolve the dispute arising out of closure
and financial distress. The petitioners seek to avoid it on the
ground of fraud. Such a challenge demands strong and specific
evidence. In the absence of such proof, the Court cannot invalidate
the settlement merely on suspicion.
24.Accordingly, I hold that the settlement of 31 March 2005
binds those workmen who accepted its terms and received
payment thereunder. The settlement, therefore, continues to
operate against them.
Allegation of fraud in obtaining signatures:
25.Fraud is a serious allegation. It cannot rest on vague
statements or general suspicion. When a party alleges fraud, the
law requires that full particulars must be stated. The person must
say what exactly was misrepresented, who made the
misrepresentation, when it was made, and how it influenced the
decision to sign. Courts require clear facts and convincing proof.
26.In the present case, the petitioners rely mainly on two
aspects. First, they say they are illiterate workmen. Second, they
state that certain union members took them to the company’s
office and obtained their signatures. Illiteracy by itself does not
establish fraud. Many industrial settlements are signed by workers
who may not be formally educated. The crucial question is
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whether they were misled or forced into signing something
different from what was explained to them.
27.The record does not show that the signatures on the
settlement documents are forged. The petitioners do not dispute
that the signatures are theirs. They also do not produce any
material to show that the contents of the documents were
materially different from what was represented to them. No
document has been placed on record to demonstrate that the
settlement terms were altered after signing or that blank papers
were later converted into binding agreements. It is also significant
that no independent witness has supported the allegation of
coercion. If the petitioners were confined or pressurised, one
would expect at least one neutral person to step forward and speak
about the incident. That has not happened. There is also no
contemporaneous complaint lodged with any authority. No police
complaint. No written protest to the management on the same day
or shortly thereafter. Silence at the relevant time weakens the plea
of fraud.
28.When the payments were made, receipts were issued. Those
receipts do not contain any endorsement that the amount was
accepted under protest or without prejudice. If a person believes
that he is being forced into a settlement or short paid, the natural
conduct would be to record some form of objection. The absence
of such immediate protest is a relevant circumstance.
29.The Supreme Court in Herbertsons Ltd. observed that
industrial settlements should be viewed as a whole. They are often
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the result of negotiations where both sides make concessions.
Courts must be slow to unsettle such arrangements unless there is
clear and strong evidence of unfairness or illegality. Industrial
peace is not achieved easily. When a settlement resolves a long
standing dispute, it should not be disturbed on slender grounds.
30.In the present case, the petitioners have not produced cogent
material to show that the settlement was the product of fraud or
coercion. The allegation remains at the level of assertion. The
documentary record, including the receipts and the absence of
timely protest, points in the opposite direction. For these reasons,
the plea of fraud cannot be accepted. It has not been proved in the
manner required by law. The settlement cannot be set aside on
such unsubstantiated allegations.
Adequacy of the payments and correctness of statutory calculations
31.The petitioners contend that even after accepting cheques
between 2006 and 2008, they were not paid their full statutory
dues. To support this claim, they placed on record their own
calculations and comparative charts. According to them, if wages,
gratuity and other benefits were properly calculated up to 31
March 2005, the amounts paid would fall short.
32.The company, on the other hand, produced its own detailed
computations. It relied upon Annexure A to the settlement dated
31 March 2005 and the subsequent corrigendum. It also placed on
record payroll statements, break up of amounts paid, and receipts
signed by the concerned workmen. The Industrial Court examined
the material placed by both sides. It considered the settlement
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formula, the annexure specifying individual amounts, and the
interest component for delayed payment. After comparing the rival
calculations, the Industrial Court came to the conclusion that the
company had computed the dues in accordance with the
settlement and its corrigendum.
33.At this stage, it is necessary to keep in mind two settled
principles of law. The first is that parties are free to enter into a full
and final settlement resolving their disputes. In the context of
industrial law, such settlements are encouraged to promote
certainty and peace. However, this freedom is not absolute. A
settlement cannot override mandatory statutory provisions. If a
statute fixes a minimum entitlement, the parties cannot contract
out of it.
34.The second principle is that where a statute confers a right
which is mandatory in nature, and where the statute prohibits
waiver, any agreement seeking to reduce that right below the
minimum prescribed by law would be void as against public policy.
35.Gratuity, where applicable, is governed by the Payment of
Gratuity Act. The Act prescribes how gratuity is to be calculated
and sets the minimum entitlement. If an employer pays less than
what the statute mandates, such deficiency cannot be justified by
referring to a private settlement.
36.In the present case, however, the petitioners have not been
able to demonstrate that the amounts paid to them fell below the
statutory minimum. Their calculations show a difference. But that
difference appears to arise from the method adopted for
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calculation, not from denial of a statutory component. The
company’s case is that the settlement formula in Annexure A fixed
the basis for computation. The Industrial Court accepted that the
payments were made in line with that agreed formula.
37.The petitioners did not produce any authoritative
computation under the Payment of Gratuity Act showing that the
statutory minimum was breached. They did not establish that a
specific provision of the statute was violated. What emerges from
the record is a dispute over arithmetic and interpretation of the
settlement terms, rather than a clear case of statutory non-
compliance.
38.When a Court reviews such findings in writ jurisdiction, it
does not re calculate figures unless there is patent error or
illegality. Here, the Industrial Court examined the evidence,
compared the figures, and recorded a reasoned finding. That
finding is supported by the documents on record.
39.On the material available, it cannot be said that the
payments made were below the statutory minimum or that the
employer attempted to defeat mandatory provisions of law. The
alleged shortfall appears to arises from differing bases of
computation. In these circumstances, the conclusion of the
Industrial Court that the payments conformed to the settlement
and corrigendum does not call for interference.
Limitation and conduct after payments:
40.The company has strongly relied on the aspect of delay.
According to it, the settlement was executed in March 2005.
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Payments commenced thereafter. An advance amount was paid
first. Thereafter, further payments were made by cheques in stages,
extending up to the year 2008. The petitioners accepted those
payments. Only on 21 April 2008 did they address a letter raising
objection to the calculations. The complaint under the MRTU and
PULP Act was filed thereafter.
41.In law, limitation depends upon when the cause of action
arose. If a person believes that he has been short paid under a
settlement, the cause of action ordinarily arises when the final
amount is paid or when he becomes aware of the alleged shortfall.
If he accepts a full and final settlement and remains silent for a
considerable period, the Court is entitled to examine whether the
challenge is an afterthought.
42.It is true that the petitioners did address a letter dated 21
April 2008. That letter shows that they raised an objection before
filing the complaint. However, the surrounding circumstances
cannot be ignored. The evidence indicates that payments were
made in instalments. Some amounts were received earlier. Some
cheques were issued later. If the petitioners were of the view that
the calculations were wrong, the natural course would have been
to object at the time of receipt of the final amount. At the very
least, they could have recorded in writing that the amount was
being accepted under protest. There is no such endorsement on the
receipts produced. There is no immediate written protest when the
cheques were encashed. The record does not show any
contemporaneous dispute during the earlier phase of payments.
The first formal objection appears only after the cycle of payments
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was completed.
43.Reasonable promptness is an important factor in industrial
matters. Settlements are meant to bring closure. If, after accepting
money and issuing receipts, a workman waits for years and then
challenges the same settlement, the Court must scrutinize the
conduct carefully. Delay by itself may not always defeat a claim,
but unexplained delay weakens the credibility of the challenge.
44.In the present case, the petitioners’ conduct suggests that
they acted upon the settlement, accepted payments over time, and
only thereafter raised a dispute. Their letter of April 2008 came
after substantial payments had already been received. There is no
material to show that they consistently objected from the
beginning. This delay, coupled with the absence of protest at the
time of receipt, supports the inference that the petitioners accepted
the settlement in substance. The belated challenge appears to be
an attempt to reopen what had already been treated as closed. The
Industrial Court was therefore justified in taking the delay into
account while assessing the genuineness of the claim.
Principle that Industrial Settlements Must Be Viewed as a
Composite Package Deal (Herbertsons Ltd. v. Workmen):
45.Applicability of the decision in Herbertsons Ltd. has to be
understood in a realistic manner. The Supreme Court in that case
explained that when courts examine an industrial settlement, they
should look at the circumstances in which the settlement was
reached and the practical difficulties faced by both sides at that
time.
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46.In industrial disputes, litigation often continues for years.
During that period, workers face uncertainty about wages and
future employment. Employers face uncertainty about liability and
survival of the business. Because of this uncertainty, both sides
may decide to negotiate and reach a middle path. The Supreme
Court recognised that such negotiations involve compromise. One
side may give up part of its claim to secure immediate relief. The
other side may agree to pay more than what it believes is strictly
payable in order to bring finality. The principle laid down is that a
settlement must be viewed as a package deal. Courts should not
separate one clause and test it in isolation. A settlement may
provide some benefits while reducing or adjusting others. If,
overall, it reflects a reasonable and fair adjustment reached
through negotiation, it cannot be labelled unfair merely because
one component appears less favourable when compared with a
possible court award.
47.Applying this reasoning to the present matter, the
background becomes important. The company had stopped
operations. Proceedings before BIFR were pending. There was
uncertainty about recovery of dues and about the future of the
establishment. In such circumstances, a settlement offering
advance payment, phased disbursement and eventual closure of
claims was a practical method to resolve a long pending dispute.
48.The petitioners seek to reopen the settlement mainly by
comparing the amounts paid with what they believe they were
entitled to under another method of calculation.
Herbertsons
cautions against this approach. The proper question is not whether
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the workmen might have obtained more through prolonged
litigation. The real question is whether the settlement, seen as a
whole, was a genuine compromise reached in the prevailing
conditions. The record shows that a large number of workers
accepted the settlement and received payments. The terms were
acted upon over a period of time. This conduct supports the
inference that the settlement was treated as a workable resolution
at that stage. Once parties have accepted and implemented such
an arrangement, the court should interfere only if there is clear
proof of illegality, fraud, or violation of mandatory statutory rights.
Therefore, the judgment of
Herbertsons reminds the Court that
industrial peace and negotiated settlements deserve respect.
Unless the settlement is shown to be fundamentally unfair or
contrary to law, it should not be disturbed merely because one side
later feels that a better bargain might have been possible.
Herbertsons applies here to say that the settlement must be judged
in the context of the difficult circumstances in which it was made,
treated as a complete package, and upheld unless strong and
specific reasons exist to reject it.
49.On the facts before me the petitioners were employees
whose employment was in suspense after 16 November 1999.
They were entitled to wages and statutory benefits unless they
validly accepted a voluntary retirement scheme. The evidence
shows a negotiated settlement dated 31 March 2005, widely
accepted and acted upon by the workforce. The petitioners
received advance and subsequent payments and issued receipts.
They failed to prove fraud or coercion with the necessary
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particularity. They did not establish that the settlement reduced
statutory minimum below mandatory levels. They delayed their
protest.
50.For these reasons, I find no legal error in the Industrial
Court’s conclusion that the complaint was not maintainable as
pressed, and that the settlement and corrigendum operate to bar
the petitioners’ claims as presented. The Industrial Court evaluated
the documents, framed relevant issues, and recorded findings
supported by evidence. I will not interfere with those findings.
51.Hence, I pass following order. All the writ petitions stand
dismissed.
52.There will be no order as to costs.
53.All pending interlocutory application(s), if any, stand
disposed of.
(AMIT BORKAR, J.)
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