Lockout Wages Not Payable After VRS Full Settlement

Case Details: Garlick Engineering vs. Suresh H. Karale [2026] 184 taxmann.com 672 (Bombay)[26-03-2026]

Judiciary and Counsel Details

Amit Borkar, J.
Sudhir Talsania, Sr. Adv. & Sujeet Salkar for the Petitioner.
Ravindra B. Nair for the Respondent.

Facts of the Case

In the instant case, the petitioner-employer had declared a lockout and suspended operations with effect from 23-09-1992. During the pendency of industrial disputes, the petitioner introduced a Voluntary Retirement Scheme (VRS) for workmen aged between 50 and 58 years, which required resignation and provided for payment of specified dues along with ex gratia.

It was admitted that all workmen, except 60, accepted the VRS benefits in full and final settlement without any protest. Subsequently, on 26-04-1996, the undertaking was closed and the remaining 60 workmen were terminated upon payment of statutory dues. A settlement was thereafter entered into between the petitioner and the recognised union in respect of these 60 workmen, upon payment of ex gratia, expressly confining the settlement to them and not extending it to others.

Meanwhile, 41 plus 146 workmen who had resigned under the 1995 VRS filed complaints claiming lockout wages from 23-09-1992 till their respective dates of resignation, along with interest and compensation. The Industrial Court, by the impugned order, partly allowed the complaints, held that the petitioner had engaged in unfair labour practice under Item 5 of Schedule IV, and directed payment of lockout wages with interest at 10% per annum in case of default.

High Court Held

The High Court observed that where a workman signs a document acknowledging receipt of full and final settlement and declares that no further claims remain, such position must ordinarily be accepted. Since the complainants had voluntarily ended their employment, accepted the benefits and executed documents evidencing full settlement, it was not open to hold that the petitioner had committed unfair labour practice by not paying lockout wages.

It was further held that the complainants, not being parties to the earlier consent terms in the writ proceedings, could not simultaneously claim that such terms were not binding on them and yet seek to derive benefit from the same.

The High Court also noted that the settlement dated 6 February 2011 was expressly confined to the said 60 workmen and did not extend to others. Once the parties themselves had clearly defined the scope of the settlement, the Court could not enlarge it.

Accordingly, the High Court held that the impugned order was based on a misunderstanding of facts and law and was therefore unsustainable.