Consent-based One Time Settlement for workmen upheld, with restored company funds used to pay the agreed full and final amount.
A consent-based One Time Settlement for a defined class of workmen was treated as binding where all affected stakeholders supported payment in full and final satisfaction and the arrangement could be implemented without defeating other claims. The Court directed that funds diverted to the Common Pool Fund, including related accruals and sale proceeds, be restored to the company's account so the settlement amount could be released to the covered workmen. The pro rata distribution approach was modified for these workmen, while other creditors' and workers' claims were left to be processed separately. The directions were expressly tailored to the facts and stated not to operate as precedent.
Issues: (i) Whether the 2018 workmen of the Faridabad unit, covered by the One Time Settlement, were entitled to receive the settled amount in full and final satisfaction instead of being clubbed with other workmen for pro rata distribution; (ii) Whether the amounts transferred to the Common Pool Fund from the company's sale proceeds and related accruals had to be restored to the company's account for disbursement in terms of the settlement.
Issue (i): Whether the 2018 workmen of the Faridabad unit, covered by the One Time Settlement, were entitled to receive the settled amount in full and final satisfaction instead of being clubbed with other workmen for pro rata distribution.
Analysis: The settlement with the 2018 workmen had quantified their claim at Rs.14,64,88,422/- in full and final terms. The parties, including the secured creditors and the ex-management, supported the proposal that the settlement amount should be released to those workmen, and the Court found that the consent recorded on affidavit bound the parties. The Court treated the settlement as a special arrangement justified by the facts and the sacrifice made by the concerned workmen.
Conclusion: The issue was decided in favour of the appellant, and the 2018 workmen were held entitled to payment under the One Time Settlement as full and final satisfaction of their claims.
Issue (ii): Whether the amounts transferred to the Common Pool Fund from the company's sale proceeds and related accruals had to be restored to the company's account for disbursement in terms of the settlement.
Analysis: The Court accepted the proposal supported by the parties that the company's funds diverted to the Common Pool Fund, together with accruals on the company's deposits and sale proceeds, should be credited back to the company so that the settlement amount could be paid without prejudicing the remaining creditors and workmen. The directions were tailored to the peculiar facts and expressly stated not to operate as precedent.
Conclusion: The issue was decided in favour of the appellant, and the Official Liquidator was directed to restore the relevant sums to the company's account and release the settlement amount.
Final Conclusion: The Court modified the earlier pro rata approach to protect the settlement rights of the 2018 Faridabad workmen, directed restoration of identified sums to the company's account, and ordered payment of the settled amount while leaving other workers' claims to be processed separately.
Ratio Decidendi: Where a consent-based one time settlement for a defined class of workmen is supported by all affected stakeholders and can be implemented without defeating the claims of others, the settlement may be specifically enforced by restoring diverted company funds and directing payment in terms of the agreed full and final arrangement.
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