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Karnataka High Court
Sri. Ashwathanarayana vs M/S. S A Engineering Works (I) Pvt Ltd on 26 March, 2026
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WP No. 35416 of 2016
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 26TH DAY OF MARCH, 2026
BEFORE
THE HON'BLE MR. JUSTICE ANANT RAMANATH HEGDE
WRIT PETITION NO. 35416 OF 2016 (L-TER)
BETWEEN:
1. SRI. ASHWATHANARAYANA,
S/O SRI MALLAPPA,
AGED ABOUT 40 YEARS,
WORKING AS SANDERLING MACHINE OPERATOR,
M/S S.A.ENGINEERING WORKS (INDIA) PVT.LTD.,
AND R/AT HOUSE NO.136, H NAGASANDRA
POST,GAURIBIDANUR TALUK,
CHIKKABALLAPUR DISTRICT.
2. SRI SUBRANAMYA K,
S/O SRI KRISHNAPPA,
AGED ABOUT 35 YEARS,
WORKING AS BENDING MACHINE OPERATOR,
M/S S.A ENGINEERING WORKS (INDIA) PVT.LTD.,
R/AT BACHENAHALLI VILLAGE,
ANDHRAHALLI POST, DODDABALLAPUR TALUK,
BENGALURU RURAL DISTRICT.
Digitally
signed by C 3. SRI S SURESH,
HONNUR SAB
S/O SRI SEETHAPPA,
Location:
HIGH COURT AGED ABOUT 30 YEARS,
OF WORKING AS WELDING MACHINE OPERATOR,
KARNATAKA M/S S.A.ENGINEERING WORKS (INDIA) PVT.LTD.,
R/AT HOUSE NO.938, NELAMANGALA ROAD,
BEHIND GARADI HOME, SANJAYNAGAR,
DODDABALLAPUR TOWN,
BENGALURU RURAL DISTRICT.
4. SRI SREENATH REDDY,
S/O SRI N T BABU REDDY,
AGED ABOUT 40 YEARS,
WORKING AS WELDING MACHINE OPERATOR,
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WP No. 35416 of 2016
M/S S.A.ENGINEERING WORKS (INDIA) PVT. LTD.,
R/AT H NAGASANDRA POST,
GAURIBIDANUR TALUK,
CHIKKABALLAPUR DISTRICT.
5. SRI SHIVAKUMAR Y S,
S/O SRI SUBBARAYAPPA,
AGED ABOUT 35 YEARS,
WORKING AS WELDING MACHINE OPERATOR,
M/S S.A. ENGINEERING WORKS (INDIA) PVT.LTD.,
R/AT VYCHAKOORAHALLI, RAMAPURA POST,
HOSUR HOBLI, GAURIBIDANUR TALUK,
CHIKKABALLAPUR DISTRICT.
...PETITIONERS
(BY SRI L MURALIDHAR PESHWA, ADVOCATE)
AND:
M/S. S A ENGINEERING WORKS (I) PVT. LTD.,
UNIT NO.17/15/04, TIPPAPURA,
KASABA HOBLI, ARALUMALLIGE POST,
DODDABALLAPUR TALUK,
BENGALURU RURAL DISTRICT,
REP. BY ITS MANAGING DIRECTOR,
HAVING ITS OFFICE AT NO.88, 3RD MAIN,
1ST BLOCK, R.T.NAGAR, BENGALURU-560 032.
...RESPONDENT
(BY SRI SOMASHEKAR, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO CALL
FOR THE ENTIRE RECORDS IN ID NO.86/2013, 81/2013,
85/2013, 18/2014 AND OTHER CONNECTED CASES ON THE
FILE OF THE PRESIDING OFFICER PRL. LABOUR COURT,
BENGALURU AND ETC.
THIS PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 16TH FEBRUARY, 2026 AND COMING ON FOR
PRONOUNCEMENT THIS DAY, THE COURT PRONOUNCED THE
FOLLOWING:
CORAM: HON'BLE MR. JUSTICE ANANT RAMANATH HEGDE
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WP No. 35416 of 2016
CAV ORDER
Five petitioners have assailed the award dated
29.01.2016 in I.D.Nos.86/13, 81/13, 84/13, 85/13 and 18/14.
2. The Labour Court has passed a common award in
the said proceedings. The Labour Court has directed
reinstatement of the petitioners however, denied the backwages
from 2015 till the date of reporting to duty.
3. The Labour Court directed that the petitioners are
entitled to the benefits conferred under the settlement marked
at Ex.M.13. Petitioners are before this Court assailing that part
of the award which has denied the backwages, continuity of
service and other consequential benefits. The respondent-
Establishment has accepted the impugned award.
4. Certain facts are admitted:
4.1 The petitioners were the employees of the
respondent-Establishment. The respondent laid off the
petitioners and some other workmen, in all totaling 35 vide
notice dated 15.10.2013. The petitioners claim that the
procedure relating to lay-off has not been followed and the
compensation payable was not paid. The respondent contends
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that all the procedures are followed and the compensation was
paid by crediting the same to the petitioners' individual
account.
4.2 On 15.11.2013, the petitioners claim that without
following the procedure, the respondent has retrenched 35
workmen. Petitioners allege that the procedure relating to
retrenchment is not followed and the prior permission required
from the Appropriate Government before retrenching the
workmen is not obtained and as a consequence of non-
compliance of mandatory procedure, the retrenchment is null
and void.
4.3 The respondent contends that notice relating to
retrenchment was issued. The respondent agreed to pay the
retrenchment compensation. Petitioners raised two separate
Industrial Disputes, one relating to retrenchment and another
relating to lay-off. The impugned award is arising from the
dispute relating to retrenchment.
4.4 Before the Labour Court, both parties led evidence.
The respondent-Establishment raised a contention that during
the pendency of the dispute before the Labour Court, the
respondent-Establishment and the Union to which the
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petitioners were members, entered into a settlement dated
18.08.2014 and out of 35 workmen who are retrenched, 20
workmen agreed to the settlement and reported to duty.
4.5 The respondent contends that in view of the
settlement under Section 2(p) read with Section 18(1) of the
Industrial Disputes Act, 1947 (for short 'Act, 1947'), the
settlement binds the petitioners and urged to reject the
reference.
4.6 The Reference Court has held that in view of the
settlement, the claim relating to the illegal retrenchment does
not survive for consideration and further held that the
settlement dated 18.08.2014 marked at Ex.M.13 binds the
petitioners and directed reinstatement in terms of the
settlement dated 18.08.2014. The Labour Court noticed that
the petitioners did not accept the offer made in the settlement,
as a consequence of that, the petitioners are not entitled to the
backwages.
5. Aggrieved by the denial of backwages and other
consequential benefits, the petitioners are before this Court.
6. Learned counsel appearing for the petitioners
would urge the following contentions:
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WP No. 35416 of 2016
(i) The Labour Court could not have denied the backwages
as the petitioners have demonstrated that the
retrenchment is illegal;
(ii) No retrenchment compensation is paid and that being a
mandatory requirement, the retrenchment is void ab-
initio and it has to be deemed that the petitioners' were
never retrenched and they were in employment and in
that event, they are entitled to full backwages.
(iii) The petitioners are not the signatories to the settlement
dated 18.08.2014 and the said settlement does not bind
the petitioners and it binds only 20 workmen who have
accepted the offer made by the respondent-Establishment
and the Labour Court ought to have considered the
petitioners' claim relating to illegal retrenchment.
7. Learned counsel for the respondent-Establishment
would urge the following:
(a) The settlement entered into between the respondent-
Establishment and the Union binds the petitioners as
there is no dispute that the petitioners were the members
of the said Union.
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WP No. 35416 of 2016
(b) Under Section 18(1)(d) of the Act, 1947, the settlement
entered into between the respondent-Establishment and
the Union binds all the members of the Union and the
petitioners' cannot claim any exception to the said settled
position of law.
(c) In the statement of objection filed before the Labour
Court, the respondent has made a categorical statement
that the respondent-Establishment is willing to extend the
benefit of settlement to the petitioners like it did to the
20 workmen who accepted the offer made by the
respondent-Establishment and this being the position, the
Labour Court has rightly held that the settlement binds
the petitioners as well.
(d) The Labour Court has rightly held that the petitioners are
not entitled to the backwages as the petitioners have
refused the offer made by the respondent.
8. The Court has considered the contentions raised at
the Bar and perused the records.
9. It is noticed from the records that the Government
referred two disputes for adjudication i.e., one is relating to the
legality or otherwise of the retrenchment dated 15.11.2013 and
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WP No. 35416 of 2016
the second one is relating to the legality or otherwise of the
lay-off dated 15.10.2013. The award which is impugned in the
present petition refers to the reference relating to the
retrenchment.
10. Though the respondent-Establishment issued
notice, no records are placed to show that the retrenchment
compensation is paid to the workmen. This being the position,
absolutely there is no difficulty in holding that the retrenchment
is not in accordance with law.
11. Now the question is, 'whether the petitioners are
entitled to the retrenchment compensation in the background
of subsequent developments viz., settlement dated
18.08.2014'?
12. There is no dispute that there was a settlement
between the respondent-Establishment and the Union and said
settlement is marked at Ex.M.13. It is again not in dispute that
when the settlement took place, no conciliation proceeding was
pending before the Conciliation Officer. The terms of the
settlement marked at Ex.M.13 among other things, provided for
reopening of the manufacturing unit with effect from
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WP No. 35416 of 2016
18.08.2014 and providing work to the workers whose names
are mentioned in the list.
13. Admittedly, there are 20 workers whose names are
mentioned in the list annexed to the settlement. None of the
petitioners' names is found in the list annexed to the
settlement. The settlement would also provide that the
company has to pay one month's salary as exgratia to each of
the workmen whose names are found in the list annexed. 50%
of the said one month's salary will have to be paid to the
workmen in the month of October, 2014 and remaining 50%
shall be paid to the workmen in December, 2014.
14. From the terms and conditions in the settlement
marked at Ex.M.13, it is apparent that, apart from the payment
of one month's salary as exgratia, there is no other obligation
on the part of the respondent-Establishment to pay the wages
from the date of retrenchment till the date of closure.
15. Though the settlement does not provide that the
workmen are not entitled to retrenchment compensation, from
the overall reading of the terms and conditions of the
settlement and also the background in which the settlement is
entered into, it is evident that the respondent-Establishment
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had agreed to restart the manufacturing activity which was
closed for want of demand for its product from the customers.
16. From the terms and conditions in the settlement,
there is no difficulty in holding that the Company is under no
obligation to pay the backwages. However, the question is,
"whether the settlement binds the petitioners?"
17. There is no dispute that the settlement is entered
into otherwise during the course of conciliation proceeding.
There is no dispute that the petitioners are the members of the
Union. If the settlement is entered into by the Union, during the
course of conciliation proceeding, such settlement is recognized
as a collective bargain on behalf of the members of the Union
and also the workmen of the establishment. Such settlement
cannot be held to be not binding on the members of the Union.
This principle also applies when the Union raises a dispute on the
behalf of the individual workman. However, if the dispute is
raised under Section 2A of Act, 1947, the settlement cannot be
without the consent of the individual workman who has raised a
dispute. Thus, a settlement by the Union representing other
workmen in the establishment relating to the similar cause, does
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WP No. 35416 of 2016
not bind the individual workman who raised a dispute under
Section 2A of the Act, 1947.
18. The Labour Court failed to take note of this aspect.
Labour Court proceeded to hold that, the settlement to which the
petitioners who has raised a dispute under Section 2A of the Act,
1947 is binding. Since, the petitioners have raised the dispute
under Section 2A of the Act, 1947 and as there was no
conciliation proceeding pending between the Union and the
Establishment, the settlement does not bind the petitioners.
19. It is noticed from the statement of objection that
the respondent has offered the employment to the petitioners on
the same terms as incorporated in the settlement. However,
same is not accepted by the petitioners as it was a conditional
offer. Thus, the Court cannot hold that the petitioners refused to
join employment as such acceptance will take away the claim for
backwages.
20. Thus, the Labour Court could not have denied
backwages.
21. It is also relevant to notice that along with the
statement of objections, petitioners have also produced the
records relating to closure of the industry. The respondent-
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Establishment has produced the notice issued by BESCOM
wherein it is stated that arrears of electricity charges are not
paid by the respondent and the electricity supply will be
disconnected.
22. It is also noticed from the records that State Bank
of India to which the respondent-Establishment owed money put
the property for auction and it is also brought to the notice of the
Court that the Establishment is closed. This being the position
and in view of the subsequent development, the award for
reinstatement does not survive and same has to be modified.
23. Though the Court has held that the retrenchment is
illegal, in the peculiar facts of this case where it is demonstrated
that the establishment stopped functioning within a short span of
2 years, and later closed, and its assets are sold, the Court
instead of awarding 100% backwages directs 75% backwages
from the date of statement of objection i.e. 23.10.2014 where
the respondent/employer has offered reinstatement (though with
certain deductions in financial benefits) till the date of closure.
The aforementioned circumstances would indicate that the
respondent/establishment was indeed in difficult financial
situation. The petitioners are however entitled to full backwages
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from the date of retrenchment till the date of statement of
objection.
24. In addition, the Court directs payment of closure
compensation as applicable under law.
25. Hence the following:
ORDER
(i) Writ Petition is allowed in part.
(ii) The award dated 29.01.2016 on the file of the Principal Labour Court, Bengaluru is modified.
(iii) The petitioners are entitled to 100% backwages from 15.11.2013 i.e., the date of retrenchment till 23.10.2014 the date of filing of the statement of objection.
(iv) The petitioners are entitled to 75% backwages from 23.10.2014 i.e., date of filing of the statement of objection till closure of the establishment.
(v) Petitioners are entitled to the closure compensation.
(vi) Since, there are no materials to determine the closure compensation, liberty is reserved to the petitioners to claim closure compensation by
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WP No. 35416 of 2016filing an application under Section 33C(2) of The Industrial Disputes Act, 1947.
(vii) No order as to costs.
Sd/-
(ANANT RAMANATH HEGDE) JUDGE brn ...