Modification of Labour Court award and disposal of petition based on amicable full and final settlement.

The petitioner company challenged an award dated 31.01.2025 passed by the Labour Court, Vadodara in Reference (LCV) No. 107 of 2017

The Labour Court had originally ordered the reinstatement of the respondent-workman with continuity of service and 25% backwages

During the pendency of the writ petition before the High Court, the parties entered into an out-of-court amicable settlement on 13.02.2026

The settlement provided for a lump-sum payment of ₹4,11,000 to the respondent in lieu of his claims for reinstatement and backwages

1. Whether the impugned award of the Labour Court should be modified in light of the subsequent settlement agreement arrived at between the employer and the workman?

The court exercised its jurisdiction under Articles 226 and 227 of the Constitution of India read with the provisions of the Industrial Disputes Act, 1947

Specifically, the court recognized a Memorandum of Settlement executed under Section 2(p) of the Industrial Disputes Act, 1947, which permits parties to resolve industrial disputes through written agreements signed by the parties and sent to the authorized officers

The court applied the principle that a judicial award can be modified to reflect a voluntary "full and final settlement" reached by the parties during litigation.

The Court observed that the parties had arrived at an amicable settlement outside the court and submitted a written Memorandum of Settlement in the vernacular language

Under the terms of this agreement, the respondent-workman voluntarily waived his right to reinstatement and backwages in exchange for a total consideration of ₹4,11,000, paid via two specific cheques

The Court noted that the settlement was entered into with "full wisdom and intellect" and without "any kind of pressure"

Since the parties agreed that no further disputes or dues remained and requested an "Award in terms of settlement," the Court found it appropriate to substitute the Labour Court’s directions for reinstatement with the specific financial terms of the agreement.

It held that the rights of the parties are now governed by the terms and conditions stipulated in the settlement agreement dated 13.02.2026, which forms part of the judicial record

The respondent’s right to reinstatement and backwages stands extinguished upon receipt of the settled amount of ₹4,11,000