W.P. No.25526 of 2010 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 28TH DAY OF APRIL, 2025 BEFORE THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE WRIT PETITION NO.25526 OF 2010 (L-RES) BETWEEN: M/S.VALLIAPPA TEXTILES LTD., HEJJALA HOBLI, BIDADI, BANGALORE RURAL DISTRICT, REP. BY ITS GENERAL MANAGER (ADMIN) ...PETITIONER (BY SRI PRASHANTH B R, ADVOCATE FOR SRI SUDHAKAR B, ADVOCATE) AND: VALLIAPPA TEXTILES & ALLIED COMPANIES WORKERS UNION, CITU OFFICE, KUMBALAGOODU, BANGALORE – 560 074, REP. BY ITS PRESIDENT. ...RESPONDENT (BY SRI K S SUBRAHMANYA, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE AWARD DT.7.5.2010, IN AID.NO.1/1996 PASSED BY THE ADDL. INDUSTRIAL TRIBUNAL, BANGALORE VIDE ANNEXURE-‘S’, IN SO FAR AS THE PETITIONER IS AGGRIEVED BY THE SAME I.E., DIRECTING THE PETITIONER TO PAY THE WORKMAN 15% BONUS FOR THE YEAR 1993-94, GRANTING 10% INCREASE IN THE BASIC WAGES FROM 1.7.1994 & ALSO HOLDING THAT THE WORKMAN ARE JUSTIFIED IN NOT REPORTING FOR DUTY TILL THE SETTLEMENT - 2 - W.P. No.25526 of 2010 DT.18.2.1995 SINCE THEY WERE NOT CALLED TO REPORT FOR DUTY IN PHASES WITH EFFECT FROM 13.12.1994 & ENTITLED TO WAGES & FURTHER HOLDING THAT THE 63 APPRENTICES ARE ENTITLED TO WAGES FROM 3.11.1994, TILL 20.2.1995 & SO ALSO FROM 20.2.1995 SINCE THEY WERE NOT CALLED TO REPORT FOR DUTY ON THE REJECTED PLEA THAT THEY ARE NOT WORKMEN AND ETC. THIS WRIT PETITION PERTAINS TO PRINCIPAL BENCH BENGALURU HAVING BEEN HEARD AND RESERVED ON 28.02.2025 AND COMING ON FOR PRONOUNCEMENT OF ORDERS AT KALABURAGI BENCH THROUGH VIDEO CONFERENCING, THIS DAY, THE COURT MADE THE FOLLOWING : CORAM: HON'BLE MR JUSTICE ANANT RAMANATH HEGDE C.A.V. ORDER This Writ Petition is by the Establishment challenging the part of the award in proceeding No.AID No.1/1996 before the Industrial Tribunal at Bangalore. 2. The dispute between the petitioner- Establishment and the respondent-Union herein was referred to the Industrial Tribunal under Section 10(1)(d) of the Industrial Disputes Act, 1947 (for short ‘Act of 1947’) by the appropriate Government vide order dated 04.05.1996. - 3 - W.P. No.25526 of 2010 3. The reference was to adjudicate 23 points under one head, and 3 points under another head. 23 points under first head were with respect to Charter of demands by the Union and 3 points referred to under second head are; (a) with respect to the legality of the lockout declared on 21.08.1994; (b) alleged willful abstinence from work by the workmen after the petitioner-Establishment lifted the lockout with effect from 13.12.1994, and (c) wages payable for the period from 20.08.1994 to 13.12.1994 and upto 20.02.1995. 4. Though the point for reference speaks about lifting of lockout with effect from 13.12.1994, in the defence statement, the Management has contended that the lifting of lockout was with effect from 13.11.1994. - 4 - W.P. No.25526 of 2010 5. During the pendency of the proceeding before the Tribunal, the petitioner - Establishment was closed vide order dated 26.02.1999 and the said order has attained finality as the challenge by the respondent-Union to the closure order remained unsuccessful. 6. Since the petitioner - Establishment was closed during the pendency of the proceeding before the Industrial Tribunal, the respondent-Union restricted their claim to certain points that survived post closure and gave up certain claims qua Charter of demands. 7. Accordingly, the Tribunal passed the award granting certain reliefs to the Union and the reliefs which are under challenge are as under: a) 15% bonus for the financial year 1993-94 as against claim of 30% bonus. b) 10% increase in the basic wage against the demand for 30% increase. - 5 - W.P. No.25526 of 2010 c) Reinstatement/Absorption of 63 apprentices discharged in 1994, with backwages from 03.11.1994. d) Award of wages after lifting of lockout on the premise that the Establishment did not ask the workmen to report to duty. 8. The contention of the Union that lockout declared on 20.08.1994 is illegal is rejected and lockout is declared to be valid from 20.08.1994 till 02.11.1994. 9. As noticed, the Tribunal has also held that the workmen were not called upon to report to duty from 13.12.1994 till 18.02.1995, the date of settlement between the petitioner – Establishment and respondent – Union. 10. The petitioner – Establishment is aggrieved by the part of the award granting certain reliefs to the respondent – Union. The respondent – Union has accepted the award and the extent of the rejection of claim of the respondent – Union has attained finality. - 6 - W.P. No.25526 of 2010 11. Contention relating to grant of 15% bonus: Learned Senior counsel appearing for the petitioner would contend that the award of bonus in excess of 8.33% for the year 1993-94 is untenable and would refer to the Certificate dated 13.02.1998 issued by the Chartered Accountant which reveals that the provision is made for payment of 8.33% bonus for the year ended 31.03.1994. It is urged that the award for payment of 15% bonus for the financial year 1993-94 by referring to the previous year’s bonus at 12% and 10% exgratia is unjustified. 12. It is urged that declaration of 12% bonus and 10% exgratia declared earlier cannot be the basis to award 15% bonus as the circumstances in 1993-94 were not similar. In addition, the declaration of bonus and exgratia was subject to the rider that there will be a disciplined work and higher production. In the absence of any proof relating to higher production, 15% bonus could not have been awarded. - 7 - W.P. No.25526 of 2010 13. It is also urged that under the Payment of Bonus Act, 1965, was applicable to only those employees who were drawing salary of less than Rs.1,600/- per month and the impugned award is unsustainable as almost all employees were earning more than Rs.1,600/- per month in the year 1993-94. 14. Learned counsel appearing for the respondent – Union on the other hand would contend that the Tribunal is justified in awarding 15% bonus for the financial year 1993-94 and it has taken into account, the amount available for distribution. The Tribunal has noticed that when 12% bonus was awarded for the year 1992-93, the income available for distribution was Rs.52.79 lakhs and for the year 1993-94, it was Rs.99.55 lakhs. 15. It is noticed that as against the claim of 30% bonus, the Tribunal awarded 15% of bonus for the financial year 1993-94. The Tribunal has noticed 12% bonus awarded for the previous year. However, did not base its award on 10% exgratia granted earlier. - 8 - W.P. No.25526 of 2010 16. The petitioner – Establishment referring to the Certificate dated 13.02.1998 issued by the Chartered Accountant urged that only 8.33% of Basic and D.A. could have been awarded as a bonus. The Certificate issued by Chartered Accountant would reveal that the petitioner has made provision for payment of 8.33% of Basic and D.A as the bonus for the financial year ending 31.03.1994. 17. The decision to pay the bonus has to be taken by the Establishment and the decision should not be contrary to the provisions of law governing payment of bonus. The bonus to be paid cannot be decided by the Chartered Accountant. The Certificate at Annexure – D does not speak about any limitation to declare/pay bonus higher than 8.33% of the Basic Pay and D.A. The Chartered Accountant has only certified that the provision is made for payment of 8.33% of Basic Pay and D.A as bonus for the year 1993-94. The Chartered Accountant has only ensured/certified that the minimum bonus that is required to be paid under the Payment of Bonus Act is declared by the Establishment. That however does not - 9 - W.P. No.25526 of 2010 need that in appropriate cases, there can be a higher bonus than the minimum of 8.33% prescribed. 18. From the impugned award, it is noticed that, the Tribunal has taken into account 12% bonus paid in the previous year. The Tribunal also noticed that 10% exgratia payment cannot be the basis to determine the bonus payable for the financial year 1993- 94. Thus, 12% bonus paid in the previous year is taken as a basis in addition to the income for the year 1993-94 to consider the bonus for the year 1993-94. The Tribunal has also noticed that payment of bonus depends on the profit of the industry subject to minimum mandated in law. 19. MW-2 in his evidence has stated that profit before tax was Rs.22.53 lakhs for the year 1992-93 and Rs.52.79 lakhs was available for appropriation and profit before tax for the year 1993-94 was Rs.81.53 lakhs and 99.55 lakhs was available for appropriation. Noticing higher profit and higher amount available for appropriation, the Tribunal awarded 15% bonus for the - 10 - W.P. No.25526 of 2010 financial year 1993-94. Though it is urged that the employees were earning more than Rs.3500/per month and not entitled to bonus, no records are produced to ascertain the salary. 20. The award in so far as payment of bonus of 15% p.a. taking into consideration, the profit and amount available for distribution cannot be said to be erroneous so as to interfere in exercise of jurisdiction under Article 227 of the Constitution of India as the award cannot be said to be arbitrary, capricious and perverse or without any evidence in so far as awarding 15% bonus for the year 1993-94. 21. Contention relating to award of reinstating apprentices: Learned Senior counsel appearing for the petitioner – Establishment would urge that the apprentices were from a remote village and did not possess the skill to work in the textile industry as the petitioner had installed highly sophisticated and expensive imported machineries. And the apprentices were required to be trained to handle the - 11 - W.P. No.25526 of 2010 machineries. Thus, the unskilled persons were enrolled as the apprentices under the Apprentices Training Scheme marked at Annexure-P which was approved by the Labour Department and Provident Fund Commissioner. One of the terms of the scheme enabled the petitioner to terminate / discharge the apprentice if their learning skill / character / or conduct was not satisfactory. 22. It is urged that the lockout was declared on 21.08.1994, and situation did not improve for considerable period, and the apprentices were removed vide order dated 06.10.1994 and 17.10.1994 from the training program. Referring to these circumstances, it is urged that the apprentices are not the workmen under the petitioner, and are not entitled to reinstatement and the benefits conferred under the impugned award. 23. Learned Senior counsel would urge that on 18.02.1995, there was a settlement between petitioner- Establishment and the respondent – Union and it was agreed that the apprentices, casual/temporary workers will - 12 - W.P. No.25526 of 2010 be allowed to resume work as per the requirement. 35 trainees were called upon to report to the training in a phased manner, and the provision made for the resumption of training scheme was also recorded in the settlement dated 23.11.1995. Referring to the terms of the settlement dated 18.02.1995, it is urged that workmen had agreed to resume work from 21.02.1995 and the award granting wages to trainees from 03.11.1994 is untenable. 24. Learned Senior counsel would also urge that the finding of the Industrial Tribunal that the apprentices were workmen as they were not engaged under the Apprentices Act, 1961, is contrary to the judgment of the Co-ordinate Bench of this Court in Tungabhadra Sugar Works vs. Presiding Officer, Labour Court1. Reliance is also placed on the judgment of the Division Bench of this Court in General Secretary Hindustan Latex vs. General Manager2. 1 ILR 1983 KAR 1 2 2022 LLR 400 - 13 - W.P. No.25526 of 2010 25. Learned counsel for the respondent – Union on the other hand would contend that the apprentices were employed to work in the petitioner – Establishment and they were not admitted only for the purpose of training. The Tribunal has referred to the Judgment in M/s. Tannory and Footware Corporation of India Ltd., and Labour Court, Kanpur3 distinguishing an apprentice appointed under the Apprentices Act, 1961 and the apprentice recognized under Section 2(s) of Act of 1947. 26. It is further urged that in the settlement arrived at between petitioner – Establishment and the Union, the Establishment agreed to absorb the apprentices as regular employees and further assured that in their place, no new appointment would be made without consulting the apprentices. Thus, it is urged that apprentices were the workmen as defined under Section 2(s) of the Act of 1947. 3 1994 II LLJ 1986 - 14 - W.P. No.25526 of 2010 27. Learned counsel also relied on the judgment of the Apex Court in Trambak rubber industries vs. Nashik workers Union4 and also the judgment in UP State Electricity Board Khanpur vs. Presiding Officer, Labour Court5. 28. The document at Annexure – P reveals that the petitioner – Establishment came out with a scheme to train the personnel to suit the avocation in Textile Industry. The scheme does provide for terminating any apprentice or learner at any time if it is found that the learner has not made any progress in his learning/ training, or that his character or conduct is not up to the mark. However, what is required to be noticed is that the petitioner – Establishment has not removed or discharged the apprentices on the grounds mentioned in the scheme. The petitioner – Establishment asserted that the apprentices have been terminated on account of lockout in the year 1994. Thus, the contention that the apprentices 4 2003 III LLJ 226 5 2003 III LLJ Allahabad 88 - 15 - W.P. No.25526 of 2010 have been terminated invoking the Clauses in the scheme is not available in the petitioner- Establishment. 29. The Industrial Tribunal has also noticed that the petitioner – Establishment has not produced the records relating to the names of apprentices, the date of enrollment to the training program, and duration for which the apprentices have undergone training. The scheme provides for three years training. It is not specifically stated with acceptable evidence to hold that the apprentices were still in the training period when they were discharged in 1994 on account of lockout. Under these circumstances, it is not possible to conclude with certainty that 63 apprentices were enrolled only for the purpose of training and not for the purpose of employment in the petitioner – Establishment. 30. The contention whether the apprentices were working as workmen or whether there was an assurance to absorb them as workmen is to be considered not only as per the training scheme but also in the light of two - 16 - W.P. No.25526 of 2010 settlements arrived at between the Establishment and the Union. 31. The first settlement is dated 18.02.1995. The second settlement is dated 23.11.1995. In both settlements, the Establishment has agreed to allow the apprentices and casual / temporary workers to resume the work in due course as per the requirement, and also assured not to recruit any fresh employees without giving opportunity to the employees referred to in Clause No.4 of the said settlement. 32. The second settlement dated 26.11.1995 also provides to absorb 45 apprentices before 27.11.1995. In respect of remaining apprentices, the Establishment assured to review the decision before the Labour Commissioner subject to improvement in power generation. 33. From the combined reading of aforementioned two settlements, it can be concluded that the apprentices were also working as regular workers in the Establishment - 17 - W.P. No.25526 of 2010 and there was an assurance to allow the apprentices to resume their work and further assurance not to employ outsiders without giving opportunity to the said persons. 34. This Court has noticed that the petitioner – Establishment has not furnished the details of 45 apprentices agreed to be absorbed immediately and the details of other apprentices who were agreed to be absorbed subject to improvement in power situation, pursuant to the settlement. It is noticed by the Tribunal that the petitioner – Establishment has not produced any details relating to the stipend paid to the apprentices and has not produced the details of date of admission of apprentices for training scheme. 35. The training program provides for three years training. Non-production of details relating to date of admission of trainees and details relating to the stipend paid to the trainees, this Court is of the view that adverse inference is to be drawn against the petitioner – Establishment. Said documents would have thrown the - 18 - W.P. No.25526 of 2010 light on the nature of duty carried out by 63 apprentices and the duration of their training. 36. In addition to the aforementioned circumstances, the very fact that the petitioner– Establishment agreed to allow 45 apprentices to resume the work (not training) and agreed to absorb remaining apprentices subject to improvement in power generation would strongly suggest that those apprentices were working as workmen for more than 240 days after gaining sufficient training to discharge the duty in the petitioner – Establishment. 37. As far as contention raised referring to the judgment of Tungabadra Sugar supra is concerned, it is noticed that in the said judgment, the Division Bench of this Court referring to the definition of workman in Section 2(s) of the Act of 1947 has held that the apprentice employed for the purpose of training cannot be termed as workman. The definition of Workman under Section 2(s) of the Act of 1947 would also include an apprentice. However, to - 19 - W.P. No.25526 of 2010 contend that the apprentice is not a workman, same is to be demonstrated through materials relating to nature of appointment and nature of work. If it is established that the apprentice was only a trainee then such apprentice cannot be termed as a workman. Likewise the law declared in S.S. Mukunda and The Management of Volvo is not applicable for the reasons recorded above. 38. Though the apprentice scheme produced by the petitioner– Establishment would indicate that the unskilled persons were taken for training, the terms of the settlement would demonstrate that they were working as workmen as the petitioner-Establishment agreed to reinstate them after lifting the lockout. 39. Moreover, irrespective of the fact that 63 persons were taken as apprentices under the training scheme, the petitioner – Establishment had assured not to employ the workmen without notice to 63 apprentices. These facts would clearly demonstrate that the apprentices were indeed working as workmen to do skilled work. This - 20 - W.P. No.25526 of 2010 Court is of the view that said apprentices were not just undergoing training. Hence, the aforementioned judgment does not come to the aid of the petitioner. 40. Likewise, the ratio in the judgment in the case of Hindustan Latex supra does not apply to the facts of the case. In the said case, the Division Bench of this Court by referring to the evidence obtained in the said case has concluded that the trainees are not entitled to regularization. In the instant case, apart from nature of work done by the apprentices, in terms of the settlement, the Establishment agreed to absorb the apprentices to do the regular work. Hence the ratio in the said judgment cannot be made applicable to uphold the petitioner’s contention. 41. Considering the reasons assigned by the Tribunal in this behalf, this Court is of the view that, the award passed by the Tribunal in so far as direction to reinstate the apprentices who have been discharged on - 21 - W.P. No.25526 of 2010 account of lockout in 1994 does not call for interference in exercise of Article 227 of the Constitution of India. 42. Regarding financial benefits conferred with effect from 03.11.1994: On the question relating to the legality of the lockout declared on 21.08.1994, the Tribunal has held that the lockout is valid from 21.08.1994 to 02.11.1994. The contention of the respondent-Union that the lockout is illegal is rejected. And the Tribunal has further held that the petitioner – Establishment did not ask the workmen to report for the duty with effect from 03.11.1994 i.e., a day after the lockout is declared to be lifted. The Tribunal has concluded that the workmen were allowed to resume the work as per the settlement arrived at on 18.02.1995 wherein the workmen were allowed to resume work with effect from 20.02.1995. In this background, the Tribunal awarded wages from 03.11.1994 to 20.02.1995 and thereafter, on the premise that even after 20.02.1995, the workmen were not allowed to work. - 22 - W.P. No.25526 of 2010 43. At this juncture, it is necessary to refer to terms of the settlement dated 18.02.1995 and 23.11.1995. Under the first settlement dated 18.02.1995, in terms of Clause No.5, it was agreed that workmen shall be paid Rs.1,250/- as advance to ameliorate the hardship during the period of work stoppage. It is further noticed that said Clause No.5 also provides for recovery of said amount in 10 monthly installments commencing from April 1995. Except the aforementioned Clause relating to payment of Rs.1,250/- as advance, there is no other agreement relating to wages payable during the stoppage of work. 44. In the second settlement dated 18.11.1995, in terms of Clause No.5, it was agreed that the wage deduction for the month of May, 1995, proposed based on “no work no pay” principle shall not be given effect to. In other words, the parties agreed for payment of wages for the month of May, 1995 despite no work. 45. It is noticed from the terms of the second settlement dated 23.11.1995, it was agreed to refer the - 23 - W.P. No.25526 of 2010 dispute relating to wages payable from 01.07.1995 to 26.11.1995, for adjudication. 46. The combined reading of the Clauses in the aforementioned due settlements would lead to the conclusion that the parties agreed to refer the dispute relating to payment of wages only for the period covering from 01.07.1995 to 26.11.1995 and there was no demand for the wages for the remaining period except for May 1995 where the Establishment gave up its time to deduct the wages for the period May, 1995 and (indirectly) agreed to pay the wages for May, 1995. 47. This being the position, this Court has to take a view that the parties arrived at some consensus relating to payment of wages during the period of lockout and thereafter till the settlement dated 23.11.1995. 48. In terms of the impugned award, the Tribunal has awarded wages from 03.11.1994 to 20.02.1995 and thereafter. This Court is of the view that the agreements - 24 - W.P. No.25526 of 2010 referred to above does not provide for the wages during the entire period of stoppage of work. 49. In terms of the agreement dated 18.02.1995 and 23.11.1995, this Court is of the view that 63 apprentices, among them 40 who were discharged on 06.10.1994 and 23 discharged on 17.10.1994 are not entitled to the wages from 03.11.1994 to 30.06.1995. The apprentices are entitled to wages for the month of May, 1995 as the decision to deduct wages for the month May, 1995 was agreed to be not given effect to. And the period from 03.11.1994 to 30.06.1995 stands excluded in view of the settlement which provides for reference to dispute relating to wages for the period covering from 01.07.1995 to 26.11.1995 only. 50. Likewise the workmen are also not entitled to wages from 03.11.1994 to 23.11.1995 except for wages for the month of May, as the period from 03.11.1994 to 30.06.1995 stands excluded in view of the settlement - 25 - W.P. No.25526 of 2010 which provides for referring the dispute relating to wages for the period covering from 01.07.1995 to 26.11.1995. To the above said extent, the award of the Tribunal is erroneous and requires to be interfered with. 51. For the aforementioned reasons, the Court is required to consider whether the workmen are entitled to wages from 01.07.1995 to 26.11.1995 based on their contention that they were not asked to report to duty after 03.11.1994, the date on which the Establishment claims that the lockout was lifted. Though, it is urged that the petitioner – Establishment had issued notices to the workmen to attend the work, the Tribunal has held that the said contention is not established. The Tribunal referring to the stand in the statement of objection has concluded that the petitioner - Establishment is unable to establish that the workmen did not report to duty even after lifting of the lockout. The Tribunal has held that in terms of order of reference, the lockout continued upto 13.12.1994 and not upto 03.11.1994 as contended in the statement of objections. The Tribunal noticed that except - 26 - W.P. No.25526 of 2010 memos issued to five workmen, document is not produced to show that a general memo was published informing all the workmen or documents relating to individual workmen informing lifting of lockout and asking the workmen to duty by mentioning a specific date. 52. The Tribunal has also taken a view that there is no plea in the evidence relating to lifting of lockout on 13.12.1994 despite the point for reference is to consider whether the lockout was lifted on 13.12.1994. The Tribunal has also referred to the attempt on the part of the petitioner - Establishment insisting the workmen to execute the bond before reporting to duty and concluded that the Management is not able to establish that workmen did not report the duty despite lifting of lockout. To prove the said contention, records for serving the notices on the individual workmen are not produced before the Tribunal and an attempt is made to produce the same for the first time in the writ petition. The documents relating to service of notice on workmen ought to have been produced before the Tribunal. The workmen would - 27 - W.P. No.25526 of 2010 have led evidence to rebut the contention. They are denied such opportunity. 53. For the aforementioned reasons, this Court is of the view that the finding of the Tribunal that the Establishment failed to establish its contention that it informed the workmen about lifting of lockout and workmen refused to report to duty cannot be said to be erroneous. However, in view of the discussions made earlier, the workmen are entitled to the financial benefit only for the period from 01.07.1995 to 26.11.1995 as the claim for remaining period is deemed to have been given- up in view of the settlement arrived at by the Establishment and the Union. Hence, the Court is required to consider the validity of the award in so far as 10% hike in the basic pay. 54. In relation to 10% hike in the basic pay: Learned Senior counsel for the petitioner assailing the award providing for 10% hike in the basic pay would contend that hike provided with effect from 01.07.1994 is - 28 - W.P. No.25526 of 2010 illegal. It is urged that the Establishment suffered huge loss on account of illegal and unjustified strike and deliberate go slow attitude of the workmen. It is urged that noticing the huge loss incurred by the petitioner – Establishment, decision was taken to close the Establishment and such decision is approved by the competent officer under the Act of 1947 and closure order dated 26.02.1999 and 14.06.1999 were questioned by filing W.P.No.14907/2000 and the Writ Petition is dismissed upholding the closure order. Writ Appeal No.342/2006 challenging the order in the aforementioned Writ Petition is also dismissed. Thus, the award for 10% increase in the basic wages is untenable is the submission. 55. In support of his case, the learned Senior counsel for the petitioner relied on the judgment in Shakthi Offset Works Nagpur vs. The State Industrial Port6. 6 (1978) 2 SCC 601 - 29 - W.P. No.25526 of 2010 56. The learned counsel for the respondent defending the hike of 10% in the basic pay, would submit that 10% hike is provided taking into consideration, the capacity of the petitioner and the social commitments of the workmen. It is also urged that hike is provided noticing the fact that in the previous settlement dated 12.07.1989, there was no provision for annual increment and the previous settlement had expired on 30.06.1994. It is further urged the petitioner – Establishment earned more profit during 1993-94 compared to previous years and the workmen were entitled to revision of salary. It is also urged that the subsequent event of closure of industry is not a ground to deny the hike in the basic pay. 57. The judgment in Shakthi Offsets supra refers to payment of fair wages and bonus. It is held in the aforementioned judgment that the award for payment of bonus and wages is dependent on the capacity of the employer to pay such bonus and wages. The Apex Court has also observed that there has to be close scrutiny of the Establishment’s working and in addition to the future - 30 - W.P. No.25526 of 2010 prospect is to be taken into consideration while deciding the dispute relating to the wages. It is also held that the gross profit or net profit alone cannot be the basis to fix the bonus and the wages. 58. This Court considered the contentions. Admittedly, the previous wage settlement was in the year 1989. Said settlement expired on 30.06.1994. The previous settlement did not provide for hike in the wage during the subsistence of the said settlement which was in force since 1989 to 30th June 1994. Thus, the wages stagnated since 1989. The revision was due in July, 1994. In 1994, admittedly the petitioner – Establishment had declared profit. Though the material placed on record indicated that the Establishment was ordered to be closed in the year 1999, that cannot be the reason to deny the hike as the revision of wages was due in the year 1994 itself and that too without any increase in wages since 1989. Had the wages been revised in 1994, probably it would not have been reduced till 1999 when the industry was ordered to be closed. This being the position, 10% - 31 - W.P. No.25526 of 2010 hike in the wages awarded by the Tribunal cannot be said to be one without basis for material. 59. The contention of the petitioner – Establishment that workmen were paid variable Dearness Allowance from 1993 to 1994 as such there shall not be any hike in the wages is dealt by the Tribunal by observing that increase in Dearness Allowance cannot be a ground to increase the basic wages. The Tribunal noticing the profit for the year 1993-94 has awarded 10% increase over the existing basic pay with effect from 01.07.1994. The award to the said extent is justified and no grounds are made out to interfere with the said portion of award. 60. Learned Senior counsel appearing for the petitioner has relied on the judgment of the Hon’ble Apex Court in Surendra Kumar Verma vs. Central Government Industrial Tribunal7. Said judgment deals with the payment of backwages/compensation in case of unjustified termination from service and compensation 7 (1980) 4 SCC 443 - 32 - W.P. No.25526 of 2010 payable in case of retrenchment order in violation of Section 25F of the Industrial Disputes Act. In the said case, the dispute is not relating to implementation of the settlement arrived at between the parties. Hence, the ratio in the said judgment does not come to the aid of the petitioner. 61. The judgment in Mysore Structures vs. Workmen of Mysore Structures8, relied on by the learned Senior counsel deals with the binding nature of settlement arrived at between the Establishment and the Union in the absence of plea and proof relating to fraud and coercion. The parties to the proceeding have not disputed the settlements arrived at between the parties. Hence, the said judgment has no application to the facts of the case on hand. In addition, the judgment of this Court is also based on the terms and conditions agreed upon by the Management at the Union. 8 1983 (1) LLN 441 - 33 - W.P. No.25526 of 2010 62. Reliance is placed on the judgment of the Co-ordinate Bench of this Court in M/s P.V.Desai vs. State of Karnataka9 to contend that industrial dispute does not exist in view of the closure of the industry. In the said case, it is noticed that the petitioner – Establishment was closed on 12.03.1984 and some of the workmen received closure compensation. Dispute was raised challenging the decision to close the Establishment. The Co-ordinate Bench of this Court has held that the discretion to refer the matter for adjudication is not unfettered and it can be exercised only in the event of an industrial dispute existing between the parties. It is relevant to note that in the instant case, the dispute was referred in the year 1996 and the industry was closed in the year 1999. The order referring the dispute to the Tribunal for adjudication was never called in question. Hence, the dispute referred to the Tribunal requires to be adjudicated on the basis of the cause of action that arose when the Establishment was running. The ratio in the 9 ILR 1991 KAR 665 - 34 - W.P. No.25526 of 2010 aforementioned judgment M/s P.V.Desai supra cannot be made applicable to the present case. 63. Hence the following: ORDER (i) Petition is allowed in part. (ii) The impugned award to the extent of awarding backwages/wages from 03.11.1994 is set aside. (iii) The workmen including 63 apprentices are entitled to revised wages for the period 01.07.1995 to 26.11.1995 and also for the month of May 1995. (iv) The award in so far as payment of 15% bonus for the year 1993-94 is confirmed. (v) The award for increase in basic pay @ 10% with effect from 01.07.1994 is confirmed. However, the workmen including 63 apprentices are not entitled to the benefit - 35 - W.P. No.25526 of 2010 of the hike in the wages from 21.08.1994 (date of commencement of lockout) till 01.07.1995. However, the wages for the Month of 1995 shall be paid. (vi) The workmen including 63 apprentices are entitled to financial benefit confirmed by this Court till the closure of the industry, excluding the period referred to in paragraph (v). Sd/- (ANANT RAMANATH HEGDE) JUDGE GVP/THM