Telangana High Court
M/S. Kshitij Infraventures Private ... vs The State Of Telangana on 29 April, 2025
Author: Nagesh Bheemapaka
Bench: Nagesh Bheemapaka
HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA
WRIT PETITION No. 2011 OF 2024
O R D E R:
Heard Sri Shyam S.Agrawal, learned counsel for
petitioner, learned Government Pleader for Labour on behalf of
the 1st respondent, Sri A.K. Jayaprakash Rao, learned counsel
on behalf of the 4th respondent and Sri Ch. Omernathan,
learned counsel for the 3rd respondent.
2. This Writ Petition challenges the validity and
propriety of the order dated 22-09-2023 in I.A.No.12 of 2021 in
M.P.No.4 of 2019 on the file of the Additional Industrial
Tribunal-cum-Additional Labour Court, Hyderabad (2nd
respondent). By the said order, petitioner was directed to
deposit Rs.49,00,000/- to the credit of M.P.No.4 of 2019 within
a period of four months from the date of the said order.
3. M.P.No.4 of 2019 was filed by the 3rd respondent,
M/s DBR Mills Telugunadu Employees' Union, in Form K-3
under Section 33C(5) of the Industrial Disputes Act, 1947 (for
short, 'the Act'), with a prayer to compute the amount allegedly
due to the workers and direct petitioner to pay the same to the
3rd respondent with accrued interest. Petitioner contends that
an agreement dated 07-03-2017 was entered into under Section
12(3) of the Act before the Conciliation Officer/Joint
Commissioner of Labour, Hyderabad, wherein they agreed to
pay a total amount of Rs.7,00,000/- in two instalments as full
and final settlement of all arrears, back wages, compensation,
and other dues. Subsequently, the 3rd respondent filed
I.A.No.12 of 2021 under Section 11 of the Act seeking a
direction to petitioner to deposit a sum of Rs.49,00,000/- in
compliance with the Memorandum of Settlement dated
07-03-2017. Petitioner filed counter to the said Application,
disputing the claim made by the 3rd respondent.
Petitioner states that agreement dated 07-03-2017
was followed by a memorandum of compromise and a
compromise decree in O.S.No.69 of 2003 (earlier O.S.No.1201 of
1995) on the file of the XII Additional Chief Judge, City Civil
Court, Hyderabad. Under the compromise, the 4th respondent
was to obtain title over Acs.16.00 of land, which was to be
developed by petitioner as per a development agreement.
Petitioner contends that it had the right to settle the workers'
claims on behalf of the 4th respondent pursuant to the
compromise. However, the 4th respondent, who was a tenant in
DBR Mills property, opposed the compromise and initiated
litigation by filing C.C.C.A.No.329 of 2003 before the High Court
and later before the Hon'ble Supreme Court. This led to two
rounds of litigation and eventual dismissal of SLP.No.5163-5164
of 2022 vide order dated 18-04-2022, resulting in the
compromise decree being set aside and the 4th respondent being
treated as a tenant at sufferance.
It is the case of petitioner that all parties, including
workmen, were fully aware at the time of entering into the
agreement dated 07-03-2017 that petitioner was not employer of
the said workmen and that the provisions of the Act are not
applicable to them. The said settlement itself narrated the
nature of relationship, specifically referencing the development
agreement dated 15-03-1999, based on which development
rights were granted by the 4th respondent to petitioner.
Subsequently, the 4th respondent repudiated the compromise.
It is also stated, the 3rd respondent filed O.S.No.293
of 2019 against petitioner for cancellation of registered
documents executed by the original owners of the property in
favour of petitioner. Despite attempts by petitioner to give effect
to the compromise decree, including legal challenges, Appeal
was dismissed and the subsequent Special Leave Petition also
met with dismissal, thereby frustrating the compromise.
It is the contention of petitioner that the 2nd
respondent - Tribunal was fully aware of the developments,
including frustration of the compromise due to the conduct of
the 4th respondent and the pendency of litigation by the workers
of the 4th respondent regarding wages which had originated in
2013 and continued even after the agreement dated
07-03-2017. The said M.P.No.1 of 2013 was eventually
dismissed by the Tribunal by order dated 13-07-2021.
Petitioner asserts that development agreement between
petitioner and the 4th respondent stood nullified due to the
frustration of the compromise decree, which formed foundation
of 12(3) agreement dated 07-03-2017. Consequently, petitioner
has become a third party with no employer-employee
relationship and with no legal authority or authorisation from
the 4th respondent to settle any claims on its behalf. Therefore,
imposing a legal liability on petitioner is impermissible under
law.
Petitioner further contended that upon being
approached by workmen of the 4th respondent for
implementation of the agreement, the Assistant Commissioner
of Labour-III, Hyderabad, was instructed to file a criminal
complaint, and accordingly, they filed Crl.M.P.No.1722 of 2023
before the XII Additional Metropolitan Magistrate, Hyderabad,
seeking relief similar to the present proceedings.
It is admitted that there is no employer-employee relationship
between petitioner and workmen of the 4th respondent, hence,
petitioner states that the order impugned is without jurisdiction
and therefore, is liable to be set aside.
It is stated, the Joint Commissioner of Labour,
Hyderabad addressed letter dated 25-07-2018 to the
Government Pleader seeking clarification with respect to
agreement dated 07-03-2017. The said letter narrates the entire
factual chronology and concludes that there were several
objections raised by M/s DBR Mills Limited, workmen and
petitioner. It was observed therein that since petitioner is a third
party, the terms and conditions of the agreement cannot be
enforced. Despite no opinion being received from the
Government Pleader, the Joint Commissioner instructed the
Assistant Commissioner to file a criminal complaint, which
remains pending. Furthermore, the 4th respondent addressed
letter dated 04-12-2017 to the Joint Commissioner of Labour,
Hyderabad clearly stating that petitioner had no right to
negotiate or settle the dues on behalf of the 4th respondent.
It is also submitted by petitioner that as per Section
12 of the Act, when an industrial dispute exists, the Conciliation
Officer is to conduct proceedings and submit a report within 14
days and a settlement, if any is to be forwarded to the
appropriate Government. Only upon satisfaction can the
Government refer the matter to a Tribunal. In the instant case,
there is no record of compliance with these procedural
requirements. It is also contended that there is also reference
to an order of status quo dated 16-06-2008 in W.A.M.P.No.814
of 2008 in Writ Appeal No. 391 of 2008, where the Union of
Employees was arrayed as the 7th respondent. It is further
argued that a criminal complaint was filed by the Assistant
Labour Commissioner on the same set of facts as the present
dispute and parallel prosecution in two Courts on the same
matter is not legally-permissible. Petitioner reiterates that it is
not the management of DBR Mills, hence had no legal status or
focus to enter into any 12(3) agreement with the workmen. It is
emphasized that petitioner does not fall within the definition of
'employer' or 'management' under the Act and therefore cannot
be subjected to its provisions. The definition of 'settlement'
under Section 2(p) of the Act necessarily requires a valid
employer-workman relationship, which is absent in the present
case.
Petitioner further states that it was the
responsibility of the Conciliation Officer to provide proper legal
guidance to workmen regarding the parties to any such
settlement. Despite these legal shortcomings, the Tribunal
passed the impugned order directing petitioner to deposit
Rs.49,00,000/- in M.P.No.4 of 2019, which is illegal and
contrary to law. It is finally stated that merely because
petitioner had agreed to pay the amount which was due by the
4th respondent to the employees in view of their entering into
development agreement in respect of the land covered by the 4th
respondent, they could not be directed to pay the amount
4. The Joint Commissioner of Labour filed counter
stating that the present dispute pertains to petitioner and
Respondents 3 and 4 and that subject matter lies exclusively
between these parties. It was emphasized that the role of the
Labour Department is purely formal in nature, therefore, no
relief can be sought against the Labour Department in this
context.
5. In the counter filed on behalf of the 4th respondent
it is stated that in M.P. No. 4 of 2019, petitioner being a
signatory, had admitted the Settlement under Section 12(3) of
the Act, hence, they are liable to pay the agreed amount. It was
further asserted that the said Settlement is binding upon
petitioner and the 3rd respondent, but not upon the 4th
respondent, who was not a party or signatory to Settlement. It is
argued that contentions raised by petitioner extend beyond the
scope of the order passed by the Tribunal.
6. The 3rd respondent - Union filed a counter stating
that petitioner, in its counter to the original petition, admitted
the Settlement under Section 12(3) and expressed willingness to
deposit the agreed amount until disposal of the main
miscellaneous petition. However, they raised objections, such as
non-disclosure of number of workers by the Labour Department
and claimed that it was willing to deposit and pay the agreed
amount of Rs. 49,00,000/- if such information were provided. It
was further stated that petitioner had earlier settled claims of
some workers through the Memorandum of Settlement dated
07-03-2017. This indicates that petitioner, after convincing
workers of a comprehensive financial resolution, delayed
execution without reason and later, attempted to escape the
liabilities voluntarily undertaken in the settlement when the
matter was taken before the Tribunal. The Tribunal rightly held
that petitioner's objections and apprehensions lacked merit and
that the amount should be deposited in court.
It is the further case of the 3rd respondent that
petitioner's claim that Memorandum of Settlement dated
07-03-2017 became unenforceable due to dismissal of SLP Nos.
5163-5164 of 2022 on 18-04-2022 is false. Petitioner
intentionally suppressed details of prior proceedings before the
trial Court and the High Court before moving the Hon'ble
Supreme Court. The SLPs. were dismissed at the threshold
solely on the ground of limitation, due to a delay of 1691 days,
and not on merits. Petitioner was accused of misrepresentation,
abuse of process, and misleading the Court. Hence, they are not
entitled to any relief.
It was also submitted that parties and third parties
to O.S. No. 69 of 2003 had filed C.C.C.A. Nos. 350, 74, 329 of
2003 and C.C.C.A. No. 131 of 2004 challenging the compromise
decree dated 03-04-2003. All the appeals were dismissed by a
common judgment dated 12-04-2004 confirming the
compromise decree. The matter was remanded to the trial court
solely for verifying the suit schedule property's market value
and court fee. SLP Nos. 13630 of 2005 and 13633 of 2005 were
filed before the Supreme Court, which were dismissed on
21-08-2005. Review petitions against the dismissal were also
dismissed on 24-08-2005. Post-remand, after multiple
adjournments, suit was dismissed on 28-04-2015 by the XIII
Addl. Chief Judge, City Civil Court, Hyderabad, as plaintiffs
failed to pay the court fee.
Petitioner later filed C.C.C.A. No. 66 of 2020 aggrieved by the
dismissal judgment dated 28-04-2015, along with I.A. No. 1 of
2020 under Section 5 of the Limitation Act to condone the delay
of 1691 days. This petition was dismissed on 07-01-2022.
Petitioner filed SLP Nos. 5163-5164 of 2022, which were
dismissed by the Supreme Court on 18-04-2022. Hence,
petitioner's claim that settlement dated 07-03-2017 became
unenforceable is false. The petitioner was fully aware of the
pending litigations related to DBR Mills, including those
dismissed much before the date of settlement. The compromise
decree in the Appeal by DBR Mills management was dismissed
in 2004 ie. 13 years before the settlement. Therefore, petitioner
cannot now cite this litigation to avoid the settlement. They
voluntarily agreed to pay Rs. 7,00,000/- in two installments--
Rs. 2,00,000/- on 31-03-2017 and Rs. 5,00,000/- on
14-08-2017, but defaulted in making the payment despite
voluntarily settling worker claims under Section 12(3) of the Act
and Rule 60 of the Telangana State Industrial Disputes Rules,
1958. Petitioner informed the Commissioner of Labour and
entered into the Memorandum of Settlement on 07-03-2017,
executed before the conciliation officer and the Joint
Commissioner of Labour, Hyderabad (Twin Cities), after the suit
in O.S. No. 69 of 2003 (Old O.S. No. 1201 of 1995) was
dismissed on 28-04-2015. Hence, it is argued that petitioner is
precluded from pleading that settlement became unenforceable
due to culmination of the said suit proceedings. It is alleged that
the petitioner is abusing legal process and harassing the
respondents by delaying legitimate claims.
It is contended that once the Memorandum of
Settlement dated 07-03-2017 was executed under Section 12(3),
creating a pre-existing admitted liability, petitioner is barred
from questioning the proceedings initiated under Section
33(C)(2) of the Industrial Disputes Act. These proceedings were
initiated after obtaining a recovery certificate under Section
33(C)(1). It is submitted that workers were subjected to
harassment and mental turmoil due to false promises of
financial relief and employment and that workers were forced to
approach the Tribunal to enforce petitioner's admitted liability.
The proceedings before the Tribunal are legal and valid. The
present Writ Petition is only a continuation of delay tactics by
the petitioner. According to this respondent, petitioner did not
inform the Tribunal about dismissal of SLPs. by the Hon'ble
Supreme Court on 18-04-2022 until 05-09-2023. The orders
were submitted only during the hearing of an interim
Application. Petitioner had already admitted in its counter
affidavit before the Tribunal its obligation to pay and cited vague
reasons for non-payment. It did not make any effort to obtain
worker details from the Labour Department, revealing its lack of
intention to comply. Furthermore, petitioner concealed filing of
this Writ Petition and the order of stay obtained therein. They
did not even file a memo to inform the Tribunal and falsely
alleged that Tribunal was proceeding despite the stay. The trial
had already commenced and cross-examination was completed
by petitioner. To delay proceedings and avoid the outcome,
petitioner approached this Court after four years. Petitioner,
having voluntarily subjected itself to the provisions of the Act,
cannot now claim that the Act is not applicable to it.
7. The Tribunal in the order impugned recorded that
petitioner from the very inception honestly has been saying that
they are ready to pay the amount to the workers who were
working as on the date of closure of DBR Mills in1991. Though
there is confusion with regard to number of workers to whom
the payment is supposed to be made, at one stage, the number
of workers as per the assessment made by the District Collector
is 349, subsequently, the number is risen to 484. Petitioner
also agreed to clear the payments to 349 workers based on the
letter addressed by the District Collector dated 27.05.2016
which gesture was taken into consideration by the Tribunal. The
Tribunal further observed that when such was the case, the
present Petition filed by a few employees seeking deposit of the
amount as a measure to secure the amount cannot be denied by
petitioner. As is evident from the material and from the order
impugned, the Union did not want to withdraw the amount,
their endeavour is only to see to it that amount assured as per
the memorandum of settlement should be secured. The amount
which was agreed upon could not be disbursed yet. For the
litigation between petitioner and respondents, workers should
not be made to suffer.
8. Having considered the material on record and on
perusal of the order of the Tribunal, it is clear that petitioner's
primary objection is the enforceability of settlement agreement
citing frustration of the compromise decree in O.S. No. 69 of
2003 (earlier O.S. No. 1201 of 1995) and the related litigation.
However, this argument overlooks the fact that petitioner
voluntarily entered into the Memorandum of Settlement under
Section 12(3) of the Industrial Disputes Act, 1947 before the
Conciliation Officer and the Joint Commissioner of Labour,
Hyderabad. Petitioner, having voluntarily agreed to pay the
workers the sum of Rs. 7,00,000/- as part of the settlement,
cannot now seek to escape its obligations merely due to the
complexities arising from other litigation. Furthermore,
petitioner made admissions in its pleadings regarding the
workers' claims and its involvement in the settlement process.
Therefore, despite the technical arguments raised by petitioner
regarding lack of employer-employee relationship, it is evident
that they assumed responsibility for the workers' claims and
cannot now distance itself from the settlement.
9. Petitioner raises the issue of frustration of
compromise decree, resulting from the dismissal of SLP Nos.
5163-5164 of 2022 by the Hon'ble Supreme Court. However,
this argument does not invalidate the settlement under Section
12(3) for it was made in compliance with the provisions of the
Act and petitioner cannot now claim that it is unenforceable due
to the outcome of the compromise decree in unrelated litigation.
It is general principle of law of contract that when a party agrees
to the terms of settlement and signs the agreement voluntarily,
the said party is bound by the terms of settlement. It is not the
case of petitioner that they were forced, coerced, threatened or
misrepresented to enter into the memorandum of settlement.
They have voluntarily undertaken the obligation to settle the
workers' claims, hence, the Tribunal is well within its
jurisdiction to direct them to fulfil this obligation.
10. Petitioner challenges the jurisdiction of the Tribunal
arguing that it is a third party and has no authority to be
directed to deposit the amount. However, the Tribunal's order is
based on the legal obligations arising from the settlement. The
Tribunal, having considered the claims of the workers and
petitioner's role in the settlement, rightly exercised its
jurisdiction in directing the latter to deposit Rs. 49,00,000/-.
Petitioner's objections regarding the Tribunal's jurisdiction are
unsubstantiated and fail to establish any valid grounds for
interfering with the Tribunal's order. Despite acknowledging its
liability and agreeing to pay the sum in instalments, petitioner
failed to make payments in a timely manner. This delay has
caused undue hardship to workers, who have been waiting for
financial relief for several years. The Tribunal, in its order,
rightly emphasized petitioner's failure to fulfill its obligations
and directed deposit of the amount to ensure that workers'
claims are addressed.
11. In the light of the foregoing discussion, it is clear
that petitioner's arguments do not warrant interference with the
order of the Tribunal. The Tribunal's direction to deposit
Rs. 49,00,000/- is within its jurisdiction and is consistent with
the provisions of the Industrial Disputes Act, 1947. Petitioner's
attempts to avoid its obligations based on technical and
procedural arguments are without merit and are rejected.
Therefore, Writ Petition is liable to be dismissed.
12. The Writ Petition is accordingly, dismissed. No
costs.
13. Consequently, the interim order dated 14.02.2024
which was extended until further orders shall automatically
stand dissolved.
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NAGESH BHEEMAPAKA, J
29th April 2025
ksld
