Bombay HC Awards Compensation over Reinstatement of Workers as Manufacturing Unit Unable to Start

The Bombay High Court has modified an Industrial Tribunal's award to strike a balance between a defunct glass manufacturing unit's inability to restart and the rights of hundreds of workers, substituting an order of reinstatement of workers with a significant lump-sum compensation package. Ruling that the 'red category' status of the industry and its location in a busy residential area made the resumption of manufacturing impossible, the Bench directed the payment of ₹2,00,000 to each of the 472 affected employees. 

Justice Sandeep V. Marne adjudicated the challenge brought by the employer against an Industrial Tribunal award that had set aside the closure of the establishment. The Bombay High Court examined whether the employer's failure to meet the strict evidentiary standards for closure under Industrial Disputes Act, 1947 necessitated the physical reopening of a factory that had remained dormant for two decades. 

Court Rejects Locus Objections Against Individual Workers 

The Petitioner-employer argued that under Section 36 of the Industrial Disputes Act, 1947 (as amended in Maharashtra), individual workmen were precluded from prosecuting proceedings when a recognized union existed under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971. However, the Bombay High Court observed that the scheme of Section 25-O is distinct. The Bench noted: "the statutory scheme of Section 25-O permits ‘any workman’ to oppose a closure application as well as to seek a review. The right to oppose or seek a review is not restricted to a recognized union, and the same may be exercised by an individual workman as well." 

Financial Viability and Technological Pretexts 

The Bombay High Court scrutinized the employer's claim that rising fuel costs and losses made operations unviable. While the Tribunal had previously faulted the employer for not switching from furnace oil to natural gas, the Bombay High Court observed that the offer from Mahanagar Gas was conditional and insufficient in quantity. Nonetheless, the Bench agreed with the Tribunal that the employer failed to prove consistent losses, noting that profits were recorded shortly before the closure application was filed. 

Modification of Tribunal Award and Balancing Equities 

Recognizing that the factory had been closed for 20 years and the land was now situated in a busy residential area, the Court found it "too late in a day to expect the Petitioner to commence the glass bottle manufacturing activities." It held that awarding lump-sum compensation would balance the equities, especially since the land value had appreciated significantly. 

The Court has following directions: 

"(i) The judgment and award dated 31 October 2017 passed by the learned Member Industrial Tribunal in Reference IT No. 64 of 2006 is modified by directing that Petitioner shall pay to each of the 472 workers/their legal heirs lump sum compensation of Rs. 2,00,000/- each within a period of 4 months. (ii) The workers/legal heirs shall submit details of account numbers to the Petitioner for transmission of compensation expeditiously. (iii) Beyond the lump-sum compensation so awarded to the workers, they shall not be entitled to any other service-related benefits/payments from the Petitioner." 

Background 

The dispute originated when the Petitioner, a manufacturer of glass containers in Mahalaxmi, Mumbai, applied for closure in 2006 citing high fuel costs and business unviability. Although the Labor Commissioner initially granted permission, individual workmen sought a review under Section 25-O(5) of the Industrial Disputes Act, 1947 after the recognized union, Krantikari Kamgar Union Versus. Collector/Labour Commissioner & Ors., withdrew its opposition. The matter was referred to the Industrial Tribunal, which in 2017 set aside the closure, citing a lack of genuine reasons and directing reinstatement of workers with benefits. 

The Petitioner challenged this in the High Court, relying on Orissa Textile & Steel Ltd. Versus. State of Orissa & Ors. to argue that the review must be disposed of within a reasonable time and Maharashtra General Kamgar Union & Anr. Versus. Vazir Glass Works Ltd. ( "(1996) 3 LLN 747": 1996 CaseBase(BOM) 374) regarding the one-year limitation for closure references. The Court also referred to Voltas Employees Union, Mumbai Versus. Voltas Limited & Anr. regarding the Tribunal's power to scrutinize closure reasons. While the Court found the employer's initial closure reasons technically weak, it determined that the 20-year hiatus and environmental restrictions made the Tribunal's reinstatement order unsustainable, leading to the award of ₹9.44 crores in total compensation for the 472 workers. 

Case Details: 

Case No.: WRIT PETITION NO. 10306 OF 2018 

Neutral Citation: 2026:BHC-AS:37424 

Case Title: Mahalakshmi Glass Works Pvt. Ltd. Versus. Sunil V. Magar and others 

Appearances: 

For the Petitioner(s): Mr. Kiran S. Bapat, Senior Advocate with Ms. Sanjana Das & Mr. Janmesh Vora i/b Mehta & Padamsey 

For the Respondent(s): Mr. K.P. Anilkumar with Mr. Amit Saple, Ms. Priyanka Kumar & Ms. Chinmay Apte 

Source: 2026 CaseBase(BOM) 5651