Authority: High Court of Judicature at Madras

Order Date: 9 July 2026

Case Overview

  • Petitioners: Management of Saram Co-operative Spinning Mill (represented by Senior Counsel Haja Naziruddin) and two additional petitioners (R. Sudharsana Krishnan, R. Nishanth, P. Anandan, P. Palani).
  • Respondents: Workmen identified as T. Rajendran, B. Baskaran, K. Krishnamurthy, G. Kanniyappan, Subbarayan, A. Mani, N. Rangabazha, V. Selvaraj, and others.
  • Petitions filed under Article 226 of the Constitution of India.
  • W.P. Nos. 541, 546, 549, 1320, 1330, 1332, 1326, 4816 of 2023 sought quash of Labour Court, Cuddalore orders dated 24‑03‑2022 that awarded closure compensation of Rs 62,092 to Rs 66,577 plus 7.5% interest and Rs 1,00,000 ex‑gratia.
  • W.P. Nos. 23299, 23617, 24392 of 2025 sought quash of Labour Court order dated 18‑02‑2021 (Unnumbered C.P. No.--- of 2021) and remand for fresh orders.
  • The mill was closed on 13‑01‑1999 without complying with Sections 25F, 25FF, 25FFF of the Industrial Disputes Act. In March 2002, a Voluntary Retirement Scheme was offered; 98% accepted, the remaining workmen filed the claim petitions.
  • The Court noted a pending W.M.P. No.26170/2025 for a single court fee and allowed it.

Legal Reasoning

  • The Court held that petitions under Section 33C(2) of the Act can only be filed when a pre‑existing right has accrued; the Labour Court cannot adjudicate factual disputes or set compensation in such petitions.
  • Citing Supreme Court judgments (Municipal Corporation of Delhi v. Ganesh Razak, Management of Tamil Nadu State Transport Corporation v. Presiding Officer, Bombay Chemical Industries v. Deputy Labour Commissioner), the Court affirmed that disputed claims cannot be decided under Section 33C(2).
  • The Labour Court had incorrectly fixed the last drawn wage at Rs 4,500; the Court directed that the last drawn wages as claimed by the Management be used.
  • The Court partially set aside the Labour Court awards and recalculated closure compensation on the basis of the accepted last drawn wages.

Revised Compensation Calculations

| W.P. No. | Last Drawn Wage (Rs) | Original Closure Compensation (Rs) | Revised Closure Compensation (Rs) |

| 541/2023 | 4,073.95 (rounded to 4,074) | 44,115 | 39,957 |

| 546/2023 | 4,025.31 (rounded to 4,026) | 44,115 | 39,486 |

| 549/2023 | 4,039.89 (rounded to 4,040) | 44,115 | 39,624 |

| 1320/2023 | 4,064.87 (rounded to 4,065) | 44,115 | 39,869 |

| 1330/2023 | 4,068.44 (rounded to 4,069) | 44,115 | 39,908 |

| 1332/2023 | 3,985.44 (rounded to 3,986) | 44,115 | 39,094 |

| 1326/2023 | 4,073.95 (rounded to 4,074) | 44,115 | 39,957 |

| 4816/2023 | 4,073.95 (rounded to 4,074) | 44,115 | 39,957 |

Total Payment Required (including ex‑gratia and interest)

| W.P. No. | Revised Compensation (Rs) | Management‑Paid Amount (Rs) | Total Payable to Workman (Rs) |

| 541/2023 | 39,957 | 13,477 | 1,53,434 |

| 546/2023 | 39,486 | 13,900 | 1,53,386 |

| 549/2023 | 39,624 | 22,935 | 1,62,559 |

| 1320/2023 | 39,869 | 12,181 | 1,52,050 |

| 1330/2023 | 39,908 | 10,502 | 1,50,410 |

| 1332/2023 | 39,094 | 12,525 | 1,51,619 |

| 1326/2023 | 39,957 | 17,441 | 1,57,398 |

| 4816/2023 | 39,957 | 17,962 | 1,57,919 |

  • The revised compensation includes the statutory closure compensation, one month’s notice pay, and the ex‑gratia of Rs 1,00,000 offered voluntarily by the Management.
  • Interest is to be paid at 9% per annum from the date of the Labour Court award.

Outcome for 2025 Writ Petitions

  • The Court found no irregularity in the Labour Court’s 2021 order concerning the three 2025 writ petitions (W.P. Nos. 23299, 23617, 24392) and therefore dismissed them.

Final Orders

1. W.P. Nos. 541, 546, 549, 1320, 1330, 1332, 1326, 4816 of 2023 are partly allowed; revised compensation as detailed above is to be paid within one month of receipt of this order, together with 9% interest.

2. W.P. Nos. 23299, 23617, 24392 of 2025 are dismissed.

3. No order as to costs.

4. Pending W.M.P. No.26170/2025 for a single court fee is allowed.

5. All connected miscellaneous petitions are closed.

Topics: Closure Compensation, Labour Court Orders, Industrial Disputes Act