Hyderabad Connectronics Limited v. State of Telangana
2025-09-12
NAGESH BHEEMAPAKA
body2025
DigiLaw.ai
ORDER : 1. Questioning the Order passed by Respondent No. 2 Labour Court-II in M.P. No. 51 of 2004, dated 18-01-2019, whereby Petitioner Company-M/s Hyderabad Connectronics Limited was directed to pay Rs. 1,58,12,319/- to Respondents No. 3 to 66, without granting an opportunity of being heard to Petitioner after reopening the case suo motu and without considering the fact that full and final settlement had already been made with some of the Respondents and without ensuring proper service of notice to Petitioner, this Writ Petition is instituted. 2. The grievance of petitioner is that impugned order violates the principles of natural justice. The Labour Court reopened M.P. and proceeded to pass orders without affording them an opportunity to contest. It is stated, though Petitioner had made full and final settlement with 32 employees after they resigned from service, the same was not brought to the notice of the Labour Court, as the unofficial respondents suppressed these material facts. Without deducting the amounts already paid under full and final settlement, the Labour Court granted the entire claim amount to the unofficial respondents, including those whose claims were already settled, which cannot be held as maintainable. 2.1. According to Petitioner Company, by resolution of its Board of Directors dated 21-12-1998, they decided to lay-off employees from 26-12-1998 due to non-availability of raw material, lack of sufficient orders and paucity of funds. Compensation as provided under Section 25-C of the Act was assured to the workmen. This fact was informed to the Commissioner of Labour, A.P., Hyderabad, by letter dated 26-12-1998. It is further stated, the workmen raised M.P. No. 51 of 2004 claiming lay-off compensation and other service benefits to the tune of Rs. 1,58,12,319/-. Petitioner filed its counter denying the claims and contending that the case was not maintainable since the Company had been referred to BIFR and under Section 22 of the Sick Industries and Companies (Special Provisions) Act, proceedings could not be continued. Petitioner filed Writ Petition No. 1809 of 2008 wherein this Court granted stay of further proceedings 01-02-2008. During the subsistence of stay order, several respondent workmen, owing to their personal needs, approached the Deputy Commissioner of Labour, Sangareddy and requested for settlement, which was arrived at in two phases.
Petitioner filed Writ Petition No. 1809 of 2008 wherein this Court granted stay of further proceedings 01-02-2008. During the subsistence of stay order, several respondent workmen, owing to their personal needs, approached the Deputy Commissioner of Labour, Sangareddy and requested for settlement, which was arrived at in two phases. On 30-06-2010, 19 workmen were paid their legal dues and on 27-04-2018, another 13 workmen were paid their legal dues, in both instances under Memoranda of Settlement under Section 12(3) of the Act after they tendered resignations. Thus, 32 out of 64 respondent workmen received full and final settlement of dues before the DCL, Sangareddy. 2.2. It is the further case of petitioner that the Labour Court purportedly reopened the matter in view of the judgment of the Hon’ble Supreme Court holding that interim stay orders would lapse after six months. Accordingly, notices were issued on 30-08-2018 to both the parties. The notice sent to Petitioner was returned with postal endorsement "Factory closed - Return to Sender" on 01-09-2018. The Counsel for Petitioner, unable to contact them, filed memo dated 01-11-2018 before the Labour Court reporting no instructions, which was accepted. Thereafter, Petitioner came to know of the impugned order only through one of their acquaintances. 2.3. On 21-12-2018, unofficial Respondents filed I.A. No. 66 of 2018 under Section 11(1) of the Act read with Section 151 CPC. to reopen M.P., however, no notice was issued or served on Petitioner nor was substitute service attempted. Despite this, the Labour Court proceeded to allow the petition of the respondent workmen. In the docket, it was recorded that counsel for Petitioner reported no instructions, but the final order dated 18-01-2019 falsely states that Counsel for Petitioner was heard. This establishes serious procedural irregularity and denial of opportunity. It is further stated, neither respondent workmen nor their Counsel disclosed to Labour Court about the settlements already made with 32 workmen. As a result, the Labour Court, without deducting the amount already paid to the tune of Rs.43,33,550/-, directed Petitioner to pay full claim amount of Rs. 1,58,12,319/- as prayed in M.P.. The claim amount was not backed by proper calculation or supporting documents, which amounts to suppression of material facts and misleading the Court. 3.
As a result, the Labour Court, without deducting the amount already paid to the tune of Rs.43,33,550/-, directed Petitioner to pay full claim amount of Rs. 1,58,12,319/- as prayed in M.P.. The claim amount was not backed by proper calculation or supporting documents, which amounts to suppression of material facts and misleading the Court. 3. This Court by order dated 26.04.2019 while issuing notice, granted stay of further proceedings in M.P. No. 51 of 2004 subject to petitioner depositing 50% of the award amount as directed by the Labour Court within eight weeks from the date of receipt of a copy of the said order. In compliance with the said order, petitioner deposited Rs.79,06,519/- representing 50% of the amount. Learned counsel for petitioner on 25.01.2023 submitted that this Court directed only to deposit but no permission was accorded to respondents to withdraw the amount. In spite of that 22 out of 64 respondents withdrew Rs.27,89,205/- and without there being any order, the Labour Court allowed 28 Interlocutory Applications filed by respondents which is highly objectionable. On the other hand, Mr. Venkata Ramana who represented the unofficial respondents submitted that upon serving a copy and with their consent, the I.As. were allowed by the Labour Court, therefore, the unofficial respondents withdrew Rs.27,89,205/- and rest six I.As. were pending before the Labour Court to withdraw their claim of amount from deposited amount of Rs.79,06.159/-. Learned Assistant Government Pleader for Labour sought time to get instructions as to whether the action taken by the Labour Court is in accordance with law or not. In that view of the matter, status quo was directed to be maintained. 4. Meanwhile, seeking vacation of the order dated 26.04.2019 and to permit Respondents 3 to 66 to withdraw 50% of the amount, they filed vacate stay Application. Along with it, counter-affidavit was filed stating that they had been continuously working in Petitioner Company in different categories of posts for more than 27 years. While so, Petitioner management declared lay-off through notice dated 26-12-1998, but failed to pay compensation as mandated under the provisions of the Act.
Along with it, counter-affidavit was filed stating that they had been continuously working in Petitioner Company in different categories of posts for more than 27 years. While so, Petitioner management declared lay-off through notice dated 26-12-1998, but failed to pay compensation as mandated under the provisions of the Act. Petitioner, after expiry of initial 45 days of lay-off, neither extended the lay-off as per law nor proceeded to take steps for retrenchment or reinstatement, and thus, as per law, Respondents 3 to 66 became entitled to full wages after the expiry of the first 45 days i.e., with effect from 09-02-1999 and continuing till date. It is contended that under the 1947 Act and also the Payment of Wages Act, these amounts are legally- payable, as Petitioner had not settled the accounts of respondents by paying the legal dues such as gratuity, retrenchment compensation, leave encashment, salary arrears for 15 days in November 1998 and 25 days in December 1998, statutory bonus, lay-off compensation for the period 26-12-1998 to 08-02-1999, and thereafter, full wages from 09-02-1999 onwards. Several requests were made to Petitioner to release the above dues, but the latter avoided settlement on one pretext or the other, leaving unofficial respondents with no option but to file the petition under Section 33-C(5) of the Act for a direction to pay an amount of Rs. 1,58,12,319/- along with interest. 4.1. It is further stated, the Board for Industrial and Financial Reconstruction (BIFR) in Case No. 75 of 1996 filed by Petitioner under Section 5(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, declared Petitioner as a sick industrial company on 08-01-1997. Despite, Petitioner did not comply with its statutory obligations to pay legal dues to its employees. In view of the judgment of the Hon’ble Supreme Court in Asian Resurfacing of Road Agency Pvt. Ltd. vs. Central Bureau of Investigation , dated 28-03-2018, law has been clearly laid down that interim stay orders will operate only for six months unless extended by a speaking order. In view of the said law and the circular instructions of this Court, the matter before the Labour Court was proceeded further, thus, there was no illegality in reopening M.P. No. 51 of 2004 and continuing proceedings against Petitioner. 4.2.
In view of the said law and the circular instructions of this Court, the matter before the Labour Court was proceeded further, thus, there was no illegality in reopening M.P. No. 51 of 2004 and continuing proceedings against Petitioner. 4.2. It is stated that unofficial respondents came to know about the alleged full and final settlements said to have been made with 32 employees only after filing of the present Writ Petition. No records whatsoever were filed before the Labour Court in M.P. No. 51 of 2004 to show that such settlements had been effected outside the Court. In the absence of such record, there was no occasion for the Labour Court to consider the same. Petitioner itself, in its notice dated 26-12-1998 to the Commissioner of Labour, had declared lay- off, citing that orders for finished products were practically nil and that there was no utility in producing goods without demand, coupled with paucity of funds and shortage of raw material. Petitioner’s own notice records that the Board of Directors in their meeting held on 21-12-1998 resolved to lay-off all workmen and staff with effect from the evening of 26-12-1998 and that such workmen would be entitled to compensation under Section 25-C of the Act. 4.3. Under Section 25-C, every workman (other than a badli workman or casual workman) whose name is borne on the muster rolls of the industrial establishment and who has completed not less than one year of continuous service, if laid- off, is entitled to compensation equal to 50% of the basic wages and dearness allowance for all days of lay-off, except weekly holidays. It is stated that Proviso thereto allows an employer, after expiry of 45 days of lay-off in any twelve-month period, to either continue lay-off only with agreement of workmen or retrench them under Section 25-F, with retrenchment compensation. In the present case, Petitioner did not obtain agreement of respondents for lay-off beyond 45 days nor did it proceed to retrench them by paying retrenchment compensation. Consequently, respondents became entitled to full wages after expiry of 45 days, in addition to compensation for the initial 45 days. 4.4.
In the present case, Petitioner did not obtain agreement of respondents for lay-off beyond 45 days nor did it proceed to retrench them by paying retrenchment compensation. Consequently, respondents became entitled to full wages after expiry of 45 days, in addition to compensation for the initial 45 days. 4.4. It is further stated, Petitioner had not filed any agreement before the Labour Court showing consent of respondents for continuing lay-off beyond 45 days, nor had it proved payment of retrenchment compensation under Section 25-F. Petitioner never disputed the calculations submitted by them along with their petition in M.P. No. 51 of 2004. Since the claim of respondents was supported by records and undisputed by Petitioner, the Labour Court was justified in allowing the claim petition. 5. Heard Smt. I. Sujatha, learned counsel for petitioner as well as learned Government Pleader for Services-I on behalf of the 1st respondent and Sri Alwaikar C. Balakrishna, learned counsel for the unofficial respondents. 6. Upon consideration of the pleadings and material, this Court is of the view that the contention of Petitioner regarding violation of natural justice cannot be sustained. In this regard, the case of petitioner is that on 21-12-2018, unofficial Respondents filed I.A. No. 66 of 2018 under Section 11(1) of the Act read with Section 151 CPC. to reopen M.P., however, no notice was issued or served on them nor was substitute service attempted. Despite this, the Labour Court proceeded to allow the petition of the respondent workmen. In the docket, it was recorded that counsel for Petitioner reported no instructions, but the final order dated 18-01-2019 falsely states that Counsel for Petitioner was heard. This establishes serious procedural irregularity and denial of opportunity. 7. As is evident from their own affidavit filed in support of this Application, petitioner stated, ‘The Labour Court said to have issued notice to petitioner and respondents, through registered post dated 30.08.2018. The notice sent to petitioner was caused to return back on 01.09.2018 with a postal endorsement ‘factory closed return to sender’. Subsequently, the counsel for petitioner came to know about reopening of M.P.No. 51 of 2004 and tried to contact them, but could not. Hence, the counsel filed memo dated 01.11.2018 before the Labour Court-II informing the same and reported no instructions. The same was accepted by the Labour Court.
Subsequently, the counsel for petitioner came to know about reopening of M.P.No. 51 of 2004 and tried to contact them, but could not. Hence, the counsel filed memo dated 01.11.2018 before the Labour Court-II informing the same and reported no instructions. The same was accepted by the Labour Court. When the counsel himself filed a memo reporting no instructions, the question of sending any notice nor taking steps to make substituted service to inform petitioner about reopening of case does not arise. In Priyanka Kumari v. Sahilendra Kumar , Transfer Petition (Civil) No. 2090/2019 the Hon’ble Supreme Court clearly observed that the word ‘refusal’ can be interpreted in synonymous to the word ‘unclaimed’. When a notice is served to the proper address of the addressee, it shall be deemed to be served unless contrary is proved. Thus, when the notice is returned as unclaimed, it shall be deemed to be served and it is proper service. Therefore, service of notice which has returned as unclaimed is considered as deemed to be served. In view of the same, it cannot be said that there is violation of principles of natural justice and the order was passed without giving petitioner opportunity of being heard. 8. Further, it is to be seen petitioner itself, in notice dated 26-12-1998 to the Commissioner of Labour, had declared lay-off, citing that orders for finished products were practically nil and that there was no utility in producing goods without demand, coupled with paucity of funds and shortage of raw material. Petitioner’s own notice records that the Board of Directors in their meeting held on 21-12-1998 resolved to lay-off all workmen and staff with effect from the evening of 26-12- 1998 and that such workmen would be entitled to compensation under Section 25-C of the Act. Under Section 25-C, every workman (other than a badli workman or casual workman) whose name is borne on the muster rolls of the industrial establishment and who has completed not less than one year of continuous service, if laid-off, is entitled to compensation equal to 50% of the basic wages and dearness allowance for all days of lay-off, except weekly holidays. Proviso thereto allows an employer, after expiry of 45 days of lay-off in any twelve-month period, to either continue lay-off only with agreement of workmen or retrench them under Section 25-F, with retrenchment compensation.
Proviso thereto allows an employer, after expiry of 45 days of lay-off in any twelve-month period, to either continue lay-off only with agreement of workmen or retrench them under Section 25-F, with retrenchment compensation. In the present case, Petitioner did not obtain agreement of respondents for lay-off beyond 45 days nor did it proceed to retrench them by paying retrenchment compensation. Consequently, respondents became entitled to full wages after expiry of 45 days, in addition to compensation for the initial 45 days. Hence, they instituted M.P. No. 51 of 2004 before the Labour Court which passed orders in favour of the unofficial respondents to the effect that petitioner should pay Rs.1,58,12,319/-. In the counter filed by the petitioner company before the Labour Court, it was stated that they had not denied about entitlement of unofficial respondents. In the lay-off notice marked as Ex.P1 also, petitioner company admitted that unofficial respondents were entitled to compensation under Section 25(c). Before the Labour Court, unofficial respondents contended that they were not paid lay off compensation as per the provisions of the Act and the management after expiry of first 45 days did not settle their accounts by paying the legal dues such as gratuity and retrenchment compensation and enclosed a statement with the amounts entitled by them including the wages for a period of 15 days in November 1998 and 26 days in December 1998, bonus for 1997-98 and 1998-99 at 8.33% p.a. leave encashment for 30 days, lay of compensation from 26.12.1998 to 08.02.1999 and wages from 09.02.1999 to March, 2004. As the management did not dispute the calculation made by the employees and failed to file any agreement entered by them with petitioners after expiry of first 45 days of the lay-off or that he had retrenched the employees by paying any compensation, the Labour Court considered it fit to allow the Petition as claimed by the employees. The said finding of the Labour Court cannot be said to be illegal, in the opinion of this Court. 9. With regard to the contention that respondents-employees have withdrawn the deposited amount without there being an explicit order from this Court permitting them to withdraw, it is to be noted that employees filed Applications seeking withdrawal of the deposited amount and the Labour Court after issuing notice to petitioner and hearing arguments permitted employees to withdraw.
9. With regard to the contention that respondents-employees have withdrawn the deposited amount without there being an explicit order from this Court permitting them to withdraw, it is to be noted that employees filed Applications seeking withdrawal of the deposited amount and the Labour Court after issuing notice to petitioner and hearing arguments permitted employees to withdraw. Petitioner, except contending that there is no order as such has not placed any law or a binding precedent as per the law laid down by the Hon’ble Supreme Court. However, the law is clear as to withdrawal by the depositor himself (i.e. the judgment debtor like the petitioner/employer in this case), and in case the depositor himself seeks withdrawal of the amount after obtaining stay by depositing the amount, the depositor has to furnish an equivalent guarantee / security to protect the interest of the other side. 10. However, when it comes to withdrawal by the decree holders (employees herein), it is to be noted, there is no binding precedent when there is conditional order of stay, albeit no permission to withdraw. However, it has been the law, customary and long-standing as it has been, more so in cases like motor accidents, or money suits, not to restrict the decree holder from enjoying the fruits of the decree, that too when the higher Court has stayed the decree specifically on the condition of deposit; and the parties (decree holders), are usually permitted to withdraw the deposited amount. 11. In the instant case, the docket proceedings of the Labour Court, in respect of the application for withdrawal of deposited amount, shows that petitioner received notices and sought time to file counter, however, counter appears to have not been filed. The Labour Court, having heard the parties, permitted withdrawal of the deposited amount, apparently considering the fact that workmen/employees have been laid-off, without employment, and there is an Award in their favour. Further, in Asian Resurfacing of Road Agency Pvt. Ltd. vs. Central Bureau of Investigation , dated 28.03.2018, law has been clearly laid down that interim stay orders will operate only for six months unless extended by a speaking order. Since stay order was not sought to be extended, 22 out of 64 unofficial respondents withdrew the amounts to a tune of Rs. 27,89,205/- by filing Interlocutory Applications in the Labour Court.
Since stay order was not sought to be extended, 22 out of 64 unofficial respondents withdrew the amounts to a tune of Rs. 27,89,205/- by filing Interlocutory Applications in the Labour Court. For the foregoing reasons and under the circumstances, this Court does not see any impropriety in the Labour Court, in the facts of the present case, in permitting the withdrawal of deposited amount. 12. It is the further case of petitioner that neither respondent workmen nor their Counsel disclosed to Labour Court about the settlements already made with respect to 32 workmen. As a result, the Labour Court, without deducting the amount already paid to the tune of Rs.43,33,550/-, directed Petitioner to pay full claim amount of Rs. 1,58,12,319/- as prayed in M.P. The claim amount was not backed by proper calculation or supporting documents, which amounts to suppression of material facts and misleading the Court. On the other hand, unofficial respondents contend that they came to know about the alleged full and final settlements said to have been made with 32 employees only after filing of the present Writ Petition. No records whatsoever were filed before the Labour Court in M.P. No. 51 of 2004 to show that such settlements had been effected outside the Court. In the absence of such record, there was no occasion for the Labour Court to consider the same. Since the plea of full and final settlement with 32 employees is unsupported by record in M.P. No. 51 of 2004, and the Labour Court cannot be faulted for not considering what was never placed before it. 13. Therefore, this Court finds that the order of the Labour Court-II, Hyderabad, in M.P. No. 51 of 2004 dated 18-01-2019 does not suffer from illegality or infirmity warranting interference under Article 226 of the Constitution of India. Accordingly, this Writ Petition fails and the same is hereby dismissed. 14. Consequently, the interim order dated 26-04-2019 stands vacated automatically.