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The Delhi High Court has observed that settlements entered into in industrial disputes are legal and valid even though provisions similar to Order XXIII Rule 3 CPC do not exist in Industrial Disputes Act, 1947.

Justice Pratibha M Singh added that settlements can be entered into between Management and Workman even outside the court or conciliation proceedings as is clear from sec. 18(1) Industrial Disputes Act.

“Such settlements would be valid and legal. Upon a settlement being entered into, parties may place the same before the forum concerned and the same can be recorded, upon the Court being satisfied that the terms are legal, just and fair. A settlement under Section 18(1) would be binding on the parties. The usual procedure for recording a settlement would be that parties would file an application and appear before the court and confirm the settlement,” the Court said.

The Court however added that in a case where one party chooses not to appear and not to confirm the settlement, the Court would have to consider as to whether settlement has in fact been arrived at or not and if the Court is satisfied that the settlement has been arrived at, there is no reason as to why the Court should not accept the settlement and despite the settlement, again go into the merits of the matter.

“Purpose of providing such provisions of settlement is that there is finality to the settlement and parties should not be relegated to continue to avail of their legal remedies leading to delays involving expending of precious judicial time,” it added.

The Court was dealing with a plea filed by management challenging the impugned order dated 7th August, 2020 in wherein the appeal against an order dated 29th November, 2018 under the section 15(2), Payment of Wages Act, 1936 was partially set aside.

The Respondent Workman was working as a Tailor with the Petitioner Management and the last drawn salary was Rs.11,830. The Management claimed that it had placed the Workman under suspension on 16th December, 2017 and a charge sheet was issued. However, the claim of the Workman was that he was terminated by the Management on 18th December 2017.

During the pendency of the dispute, the parties had entered into a settlement dated 3rd May, 2019 as per which the Respondent Workman agreed to accept a lumpsum amount to settle the said dispute.

It was the case of the management that in lieu of the said settlement, a sum of Rs.80,720 was paid to the Workman by cheque dated 30th May 2019. After the settlement was entered into, the Management had approached the Appellate Court for disposal of the appeal and for refund of the pre- deposit amount of Rs.27,406.

However, vide the impugned order, the Appellate Court had set aside the penalty which was imposed and held that the pre-deposit amount cannot be refunded on the ground that the settlement was not acknowledged and accepted by the Workman.

“A perusal of Section 18(1) of the Industrial Disputes Act, 1947 (hereinafter “ID Act”) shows that a settlement can be arrived at between the parties otherwise than in the course of conciliation proceedings i.e., Section 18(1) ID Act clearly recognises out-of-Court settlement,” the Court said.

The Court took note of the fact a sum of Rs.27,406 was merely a pre-condition for hearing of the appeal by way of a pre-deposit and that the bank of the Management had certified that the amount of Rs.80,720 was encashed by the Workman.

“To this Court, there is no doubt that the settlement has been signed by the Workman as there is no allegation of forgery or fabrication. The present case would be a settlement in terms of Section 18(1), ID Act and as per the above decision, would be binding on the parties,” the Court said at the outset.

Accordingly, the set aside the impugned order and directed that the amount of Rs.27,406 deposited with the Appellate Court be refunded to the Petitioner Management in view of the settlement.


Citation: 2022 (Del) 

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