Telangana High Court
M/S. Hyderabad Connectronics Limited vs The State Of Telangana on 12 September, 2025
Author: Nagesh Bheemapaka
Bench: Nagesh Bheemapaka
HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA
WRIT PETITION No. 9066 OF 2019
O R D E R:
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. 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. 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. 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. 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. 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.
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 1, 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
Transfer Petition (Civil) No. 2090/2019
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. 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. 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. 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.
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NAGESH BHEEMAPAKA, J
12th September 2025
ksld
