Wages paid under Section 17B of Industrial Disputes Act cannot be deducted from lump-sum compensation.

The appellant (workman) challenged his termination before the Labour Court, which subsequently awarded reinstatement without continuity of service or backwages

The State challenged this award via a Special Civil Application in 2022

The learned Single Judge modified the award, replacing reinstatement with a lump-sum compensation of ₹3,00,000/-. However, the Single Judge directed that ₹2,79,000/- already paid to the workman as "last drawn wages" under Section 17B of the Industrial Disputes Act during the pendency of the litigation be deducted from this compensation, leaving a balance of only ₹21,000/-

The workman appealed this deduction

1. Whether wages paid to a workman under Section 17B of the Industrial Disputes Act, 1947, during the pendency of proceedings, can be deducted from a lump-sum compensation awarded in lieu of reinstatement.

The Court applied Section 17B of the Industrial Disputes Act, 1947, which mandates that an employer who challenges an award of reinstatement in a High Court or the Supreme Court is liable to pay the workman "full wages last drawn" during the period of pendency of the proceedings

The Court characterized these payments as a "subsistence allowance" intended to enable the workman to survive while the award in their favor is being litigated by the employer

The Court reasoned that Section 17B is a statutory protection designed to provide a subsistence allowance to a workman when an employer chooses to prolong litigation by challenging a reinstatement order

The Court rejected the State's argument that such wages should be deducted because the workman did not actually perform work during that period

The Division Bench observed that because Section 17B payments are specifically for subsistence during the legal process, they possess a distinct character and cannot be treated as a part of, or an advance toward, the final lump-sum compensation awarded in lieu of reinstatement

Consequently, the Single Judge's decision to credit the 17B payments against the final compensation was legally erroneous

It modified the Single Judge’s order, holding the State liable to pay the full lump-sum compensation of ₹3,00,000/- in addition to the ₹2,79,000/- already paid as subsistence allowance. The State was directed to pay the amount within six weeks. The Writ Appeal was allowed to that extent